The demise of the annual review

Why not try regular, web-based feedback instead?
By Michelle Berg
|Canadian HR Reporter|Last Updated: 12/01/2014

The dreaded annual review may finally be on its way out, making way for continual, honest communication between managers and employees throughout the year.


Companies that cling stubbornly to the annual review — a concept born in the 1950s when employees worked for the same employer for 35 years — could die a slow and painful death. That’s because annual reviews need a lot of improvement when it comes to boosting employee performance and engagement, and helping managers build productive relationships with their teams. 


After all, how can a conversation that happens once a year, based on irrelevant scores that rate canned competencies, do anything but increase anxiety for all parties involved?


Instead of the annual review, many companies are adopting new team feedback platforms that foster open communication between managers and employees all year long. These solutions stimulate conversations and treat performance management as an everyday check-in, rather than a once-a-year meeting. 


What makes it work is a technology platform that encourages open discussion between managers and employees. After all, performance management shouldn’t be about saving time — it’s about helping employees grow and reach goals.


Faults of the traditional system

Can everyday communication really replace the annual review? Doesn’t management need yearly “scorecards” to track employee progress and performance? 


To answer these questions, HR professionals must ask themselves why they do annual reviews in the first place. If it’s for legal purposes, most reviews are written so poorly they can hurt the organization rather than help mitigate any future litigation issues.

If it’s for coaching purposes, does filling out a form once a year really prove coaching and development has taken place? If it’s for communication purposes, should you wait to communicate with employees about their ideas, goals and progress until the end of the quarter or year?


In idealized terms, the annual review is supposed to help employees grow and seize new opportunities. The problem is something called the “recency effect” — we rarely remember what happened last week, never mind one year ago. Yet, on the annual review form, employees and managers are asked to remember everything that happened in the last 12 months and document it accordingly. 


Case studies

In looking for an ongoing performance management solution to encourage constant feedback — especially for employers with multiple locations and employees scattered far and wide — Elevated HR wanted a web-based feedback system that could both foster and keep track of organic conversations.


While analytics were important, we knew employee growth and development wouldn’t happen by filling out a form or pushing buttons with fancy pre-populated comments. The technology needed to automate the feedback process while promoting the human touch. 


Our organization chose an app called 15five. The premise is simple: Each week, managers ask employees a few questions that take 15 minutes to answer. Managers then take five minutes per employee per week to respond to feedback, spotting issues and highlighting successes directly within the web app. 


After implementing the platform, we quickly saw the value of weekly conversations that were automatically recorded. Employees and managers could communicate on their own time and felt empowered to do so because the simple Q&A-style interface wasn’t as daunting as a blank form. 


We soon saw the benefit of addressing issues weekly instead of waiting months while things got worse. There was instant improvement in employee engagement and a clear impact on productivity. 


Hotel chain Western Canada decided to implement the same platform, citing communication and employee growth and development as the main goals. Employees and managers saw annual reviews as an “exercise in futility” that had no impact on company growth or employee success. And with multiple locations, the hotel group needed a web-based platform accessible from any device, but also one that was fast and easy to use since hotel employees were often busy serving guests, not sitting in front of computers.


The hotel group was able to address training requests as needed, instead of annually. In one case, a manager was able to mitigate a potential resignation by handling a rumour immediately, instead of letting it fester. 


After a financial firm implemented the software, management was soon asking if there was any reason to keep doing annual reviews the old way — by filling out a form and sitting down to go over it. With the employee feedback app, managers were so tuned into their employees’ goals, ideas and progress each week, an annual review just felt extraneous. For the upcoming year, the company decided to skip the annual review altogether. 


Performance management should not be a formality. It’s an ongoing, active, engaging process to motivate and connect with employees. When employees are aligned to hit and achieve regular goals — and managers can keep track of employees’ progress, achievements and setbacks using a simple, weekly check-in — your company will undoubtedly see increased revenues and profitability. 


Michelle Berg is president and CEO of Calgary-based Elevated HR.  She can be reached at michelleb@elevatedhr.com.

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