5 Reasons to Say Goodbye to Yearly Performance Reviews

reviewIt’s that time of year for managers to pull out their employee files, call each person in one-by one, and share with them how successful, or unsuccessful, they have been over the last twelve months.  It is a tradition that many businesses have held on to, believing that it promotes a better business culture and assists employees in becoming more motivated and better positioned for the upcoming year.  However, have yearly performance reviews become one a traditional business activity that no longer has any relevancy in today’s world?

"Many cultural practices stay around beyond their useful life, and annual reviews are one of them," says David Hassell, CEO of 15Five, a San Francisco-based software company.

Instead, Hassell recommends that entrepreneurs replace annual reviews with weekly check-ins. "Communication today is instantaneous and people expect a quick response," he says. "To wait until the end of the year to provide employees with helpful feedback is just too long."

Below are five reasons why Hassell believes that annual reviews are outdated:

1. Typically annual reviews focus more on the manager sharing his or her insights on how the employee can improve their performance but gives little opportunity for the employees to share their feedback.  Rather than waiting twelve months to have a discussion, consider having a weekly review with employees.

Hassell suggests asking employees these four questions each week:

  1. What are your successes and what's going well?
  2. What challenges are you facing, and where do you need help?
  3. Do you have any new ideas that could improve your job and/or the company?
  4. How are you feeling and what is the morale around you?

Keep the weekly reviews short and simple.  Employees should take about 15 minutes to answer and the manager should take about 5 minutes to read and respond.  The weekly reviews do not need to be a face-to-face meeting.  Sending out an email to all employees and responding to their answers may be all that is necessary.

2. Does one meeting every 365 days really give good insight on the culture of a company or nature of employees?   “When you review your employees once a year, you get one touch point,” says Hassell. “Weekly check-ins provide 50 touch points. Annual reviews feel burdensome to those who must prepare them.  Weekly check-ins are moving, lightweight and agile."

3. Extreme delays in discussion could mean you are missing important elements. Customers are buying and engaging with companies on a daily basis.  Managers need to gain feedback from their employees quickly to discern if there is a better system that needs to be created.

"When you offer quick feedback you offer the ability for quick correction and learning," says Hassell. "You also have a chance to give quick praise - employees want to know they're valued."

4. Typically, annual reviews only focus on the last quarter. Unless a manager successfully documents an employee's performance throughout the year, they typically can only recall an employee’s performance in the most recent months.

"An employee may have had a recent personal challenge that affected their performance but didn't give a full picture of their work ethic," says Hassell. "Weekly reviews provide a more objective sense of an employee's status."

5.  “Millennials average a year and a half to two years on the job,” says Hassell, “which means annual reviews would provide them with just one or two chances for evaluation.  Feedback is helpful from an employee standpoint.  If it's done more frequently, it may even give employees a reason to stay on the job longer."

If you want to conduct periodic reviews that capture the performance of an employee throughout the year, click here and learn about Appraisal-Smart. Appraisal-Smart is an easy and flexible online performance review in which you can make performance notes throughout the year, conduct reviews as often as you like and get the employee’s input as well.