As a fun year-end treat, many workers are asked to distill an entire year of hard work into a bullet-point list of achievements, then write a list of goals that could double as industry-buzzword Mad Libs, then sit back and pray their boss bases their end-of-year bonus off of more than just the one typo they made in a client deliverable last week.
Annual performance reviews are stressful (so much so that 34% of millennial office workers surveyed in 2017 reported crying during their review), and some companies have started to question their value as a one-off exercise.
As with a gym routine, companies including IBM, Deloitte, and Accenture have found the best results come from consistency. They’re eschewing the old model of relying on one annual performance review to deliver feedback in favor of offering employees more frequent, candid conversations throughout the year about their job performance. Advocates of this approach believe teams are better for it.
Let’s review the review. Performance evaluation began in fits and starts as early as the industrial revolution, gaining near ubiquity in US firms by the 1960s with 90% of companies nationwide using appraisals to give high performers monetary rewards and motivate low performers (or show them the door).
Today, the year-end performance-review process is still deeply entrenched in corporate America, yet many aren’t happy with the outcomes. According to a 2019 Workhuman Analytics & Research Institute study, 55% of workers said annual reviews didn’t improve their performance. Blakeley Hartfelder, a director in the Gartner HR practice, told HR Brew that in 2021 only 28% of CHROs agree that performance evaluations at their organizations accurately capture employees’ contributions.
Samuel Culbert, author of Get Rid of the Performance Review!, told HR Brew that traditional year-end reviews are “completely broken” and “bogus.”
Culbert says part of the problem is that many reviews are structured to be adversarial. The employee wants to be praised for their contributions and get a raise, but if the manager doesn’t come with a list of constructive critiques then “HR will think they aren’t doing their job.”
This is a problem, because research suggests negative feedback doesn’t motivate many to improve. “People tend to think they’re better at their jobs than they are,” Culbert said. When employees hear feedback to the contrary, it’s a blow to the ego.
Megan Krause, senior director of content at performance-marketing company Investis Digital, agreed when she told SHRM that a single annual review often makes negative feedback worse, because the critique could come as an unpleasant surprise.
“I’ve found annual reviews to be, by nature, one-sided and nerve-racking for the employee,” Krause told SHRM in January. “Here, let me review everything about you and your work performance for the last 12 months,” Krause said, describing how annual reviews can feel. “We have one hour.”
Shell-shocked employees may not take too kindly to the feedback. Gallup data from 2019 suggests as many as four out of five employees whose managers’ feedback left them with “negative feelings” are actively or passively looking for a new job.
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365-day feedback. Feedback is not inherently bad, workers just don’t want to be blindsided by it: According to an Ernst Young survey, 97% of Gen Z workers are open to continuous feedback at work, and a separate 2020 study from talent management firm Reflektive found that employee interest in at least monthly performance reviews rose by 89% between 2018 and 2020.
Some employers are listening. The 2019 Gartner Performance Management Benchmarking Survey reports 81% of HR leaders have begun shaking up their performance management processes. Some of those companies are switching from yearly appraisals to more frequent check-ins.
Kelli Jordan, the director of careers, skills, and performance at IBM, told HR Brew that about five years ago the firm worked with employees to revamp their performance-management processes. Previously, they’d used “just a single rating to reflect everything that happened over the course of the year.”
This was ineffective, Jordan said, because employees “set goals at the beginning of the year and then they never thought about them again.”
Now, IBM regularly schedules manager-employee check-ins to discuss goal progression. Johnson says IBM uses “candid conversations” to deliver routine feedback from clients and project members. Jordan believes this approach takes stress off of the end of the year review and ensures there are “no surprises” come year end.
Jordan says having more rating windows also lets raters be empathetic to what’s going on in employees’ personal lives. During the pandemic, workers may have been dealing with caregiving responsibilities, emotional, or physical health problems. Checking in more frequently lets managers and employees discuss goals and recalibrate if needed.
“Candid conversations are founded in relationships and having those conversations regularly. You’re having that ongoing dialogue about the status of goals,” Jordan explained. “And so perhaps you’re resetting and recalibrating your goals for that quarter or that month based on what might be happening around you. That’s okay.”
IBM isn’t alone. According to the 2019 Workhuman report, only 54% of companies were still using annual reviews (down from 82% in 2016) as more and more companies jump aboard the continuous feedback train.
Google is another big name trying it out. A case study from Leapsome reports Google now holds two performance reviews per year that incorporate feedback from peers and managers to offer a “360 view of performance.” By having two lookback windows instead of one, Google hopes to limit recency bias (you know, where your boss remembers the infamous late-November typo better than the slam-dunk presentation you gave in March).
It doesn’t hurt that it also pays off in organizational benefits. According to 2020 data from Betterworks, companies that offer continuous feedback outperform traditional companies in productivity (66%) and have more motivated employees (65%).
Final feedback: We’re not done with reviews just yet. October 2021 data collected by Gartner found only 13% of companies are ready to do away with the process entirely. If IBM’s experience is any indication, offering continuous ratings could improve the utility of the exercise for employees and managers alike.