Annual Performance Reviews or NOT
As the third-quarter approaches, it is time to prepare for your employees annual performance reviews. Those dread reviews. Managers and employees hate them. Now is the time to start thinking about each employee pro’s/con’s, strengths and weaknesses, and try to recall all the praise you’ve given through out the year. Consider the following questions:
Have you ever considered what your employees think about your company?
Have you given feedback that you thought would motivate your employees?
Have you even provided feedback in a constructive criticized way that did not go as planned?
Have you ever given feedback on a great job immediately — “Hey, great work”, or put it off to a later day or even forgot to give recognition?
Have you even conducted an annual review that did not reflect the positive contributions the employee made through out the year, but questions that reflected an only Yes/No answer.
Its a New Millennium — Literally
The days of annual reviews are beginning to go the way of the modem — outdated and slow. Fiber optics have begun the transition to over take slow speeds — annual reviews.
The workforce has begun the transition phase of retiring the baby boomers (1946-1964). GenX and Millenniums are replacing the aging boomers. Employers need to rethink the annual review process. Annual reviews are time consuming, the ROI does not improve performance — matter-of-fact, it increase employee turnover, and employee moral decreases.
Some of the largest Fortune 500 companies have eliminated annual performance reviews. Take a look at Deloitte, “In a public survey Deloitte conducted recently, more than half the executives questioned (58%) believe that their current performance management approach drives neither employee engagement nor high performance. They, and we, are in need of something nimbler, real-time, and more individualized—something squarely focused on fueling performance in the future rather than assessing it in the past.
The belief is that most performance reviews only take into consideration the last few months, not the entire year, unless the only metric used is data driven.
For example, sales contributors are assigned an annual quota — say $5M. One question on your performance review would ask this question: Did you achieve your assigned quota? Lets say you achieved $4.85m. Your answer would be No. Another question. Did you achieve 5 New logo’s this year — assume you achieved 4 and you have 2 at 75% sales stage but you received your purchase order after the fiscal year. You would have to answer No.
Lets assume there are 5 questions. You answered Yes to the last three. Each question would weigh in at 20% (2-no and 3-yes). Your performance score would be 60% even though you busted you butt all year.
This is a common challenge to anyone carrying a quota.
Change is Coming
Deloitte is not the only Fortune 500 company to change their performance evaluation. Look At Adobe, Accenture, and GE. Adobe abolished the dreaded annual review in 2012 and now have “check-ins”. Adobe noticed “voluntary attrition always spike in the months after review time.” During an interview with an India newspaper, who asked Donna Morris, SVP of Global People Resources, what was new in HR, she replied “we plan to abolish the performance review format.” And then, it was gone.
One of the largest consulting practices in the world, Accenture, followed along. September 2016 Accenture, who employs 330,000 people, said “Accenture will get rid of annual performance reviews and rankings. Employees will receive timely feedback from their managers on an ongoing basis following assignments”. Like Adobe, Accenture got tired of forced ranking, paper work, and the undue stress performance reviews had on managers and employees.
Today, almost 6% of the Fortune 500 companies have all dropped the annual performance reviews for shorter term, monthly, quarterly or project specific reviews. Microsoft and GE are part of the 6%.
Alternative to Annual Performance Reviews
Why are these Fortune 500 companies transitioning away from annual performance reviews? They all believe that employees should be reviewed throughout the year. By providing monthly, quarterly, or project based reviews, employees will know how they rank so they can improve their skill set, acquire additional training, or possibly seek an alternative position that best matches their talent.
Deloitte did a study and found they spent almost 2 million hours on performance management a year. Most of these hours were spent about talking about the employees, not about helping them grow their careers.
Ready for Change?
What are you doing today? Are you still using a modem for dial-up or are you using the latest, more efficient fiber optics network? Is it time for your company to rethink the annual performance review and follow some of the largest Fortune 500 companies in the world? Follow the trend and consider shorter terms — monthly, quarterly, or project based. Based upon all the research from Accenture, Adobe, Deliotte, and GE, the best way to keep employees happy is to keep them motivated with negative or positive praise. Provide support were support is required. Recognize employees immediately whether that is with a hand written note, a gift card, or a shout out.
In the end, each employee will know where their career stands and will not be surprised at the end of the year.
Allow me to quote May Kay Ash, founder of May Kay Cosmetics, “There are two things people want more than sex and money: Recognition & Praise”. 42% of Millennials say they want weekly and 48% say they acting on feedback would reduce turnover.
Check out the below infographic. It might open your eyes!
What are your thoughts?
This infographic was crafted with love by Officevibe, the employee feedback software that helps you create a company culture your employees will love.