Why Annual Reviews Are Bad Practice

Why Annual Reviews Are Bad PracticeOh, the dreaded annual review. In our adult lives there are few things as cringe worthy and anxiety inducing. We know that even if we’re doing a good job, we will almost certainly be receiving some form of criticism — and there’s always a lurking fear that somewhere along the way we’ve made some misstep that will come back to haunt us. It feels very much like that one college class you took wherein your entire grade was determined by one single exam. Did you do everything you could to prepare? The what-ifs can stack pretty high prior to entering your manager’s office and closing the door behind you with that ominous click.

Luckily for us, companies are beginning to realize that annual reviews are a pretty poor way of giving feedback on performance and are quickly losing popularity. CNN Money has reported that Accenture, GE, Microsoft, CIGNA, The Gap, and Deloitte have all ditched their annual review processes, and more than 46% of organizations polled planned to revamp their review process in the coming year. Besides being anxiety inducing and generally unhelpful for the employees, they’re also not very proactive. People’s performance changes over time, as do company goals and objectives. Likewise, employees can take on new responsibilities over the course of the year, making it difficult to assess performance objectively.

Once a year simply isn’t enough to keep up with the dynamic nature of the workplace. Feedback should be looked as a tool — a way to deliver both positive and corrective points to employees on an ongoing basis. By increasing the frequency of feedback, and making sure to include positive feedback as well, you can also foster an environment wherein employees feel more like they are coached rather than coldly evaluated at some arbitrary date.

It’s true that at some larger companies there is a desire to go through formalized processes to maintain a paper trail for accountability, but this shouldn’t preclude a much less formal approach between these sessions. Consider Adobe, which joined the above companies in stopping its annual reviews. Their Executive VP of HR wrote the following on their blog:

Last year we abolished our annual performance review in favor of lighter-weight Check-in conversations that center on ongoing feedback. We don’t have labels, a formal tool or prescriptive time of year it all has to happen – we just ask people to have conversations.

Feedback is all about the conversations. It’s about openness and continuity, a two-way street that should always be open. Hopefully, the trend of annual review abolishment will continue in favor of this more realistic, humanistic, and proactive approach of conversations and coaching.

Doug Ramsay

Doug handles the marketing and web presence for Adventure Associates. If he's not geeking-out with the latest, greatest web marketing tools, then you'll find him swirling and sipping his way through wine country.

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2 comments on “Why Annual Reviews Are Bad Practice
  1. Doug Ramsay says:

    Thanks for commenting, Topher. I checked in with one of our directors, Shawn Dunning, and he responded accordingly:

    “Performance-based compensation AND constructive feedback are both important; the key is not to mix them together at the same time. Feedback should be an avenue to helping someone to perform as well as possible; the “judgement” of their performance, insofar as compensation is tied to it, should come only AFTER reasonable opportunity for progress has been given–and that progress often depends on frequent feedback.”

  2. topher olsen says:

    I have read a lot of similar articles, but none of them address when/how to submit pay increases. Right now our review is tied to compensation. Believe me, I’m TOTALLY in favor of this approach, but how/when do you tie the $$$ to their performance??

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