# Rethinking Annual Appraisals: Why They Don't Work and What to Do Instead
Written on
Understanding the Flaws of Annual Appraisals
As another year comes to a close, it's time for performance reviews. You find yourself seated across from your manager, revisiting the goals established a year prior. You feel confident about your contributions, but then the unexpected feedback strikes. You're informed that your performance hasn't met their expectations—news that comes as a shock, especially since you weren't previously aware of any issues.
This scenario is far from uncommon. Recently, I spoke with a senior manager from a prominent bank who experienced a similar shock during their appraisal. Despite a year of hard work, they learned that their performance was deemed unsatisfactory, and they were completely unaware of their shortcomings. They had even been asked to set new objectives, which they perceived as futile.
I have always been critical of annual appraisals. In my extensive professional experience, I have found no credible evidence that they enhance employee performance in any way.
The Unquestioned Tradition of Annual Reviews
So why do organizations continue with this ineffective practice? Many companies adopt annual appraisals simply because they feel obligated to do so, often following the lead of larger corporations without questioning their efficacy.
The Detrimental Impact of Appraisals
Annual reviews often produce the opposite of motivation. They can be disheartening, presenting employees with a list of their failings. This typically culminates in disappointing news regarding raises or promotions due to perceived underperformance. How can this approach foster motivation?
Misaligned Objectives
The appraisal process often seems more focused on the organization than the employee. I have yet to meet anyone who has genuinely benefited from an annual review. While these reviews may include feedback from both managers and employees, they can create a culture of secrecy and mistrust. Anonymous feedback often leads to vague criticisms that do little to help individuals improve.
The Problems with Long Time Frames
Evaluating performance on an annual basis is problematic. It's nearly impossible to remember specific achievements over an entire year. As a result, managers may only recall recent performance, rather than considering the full scope of an employee's contributions.
Instead of waiting for a yearly review, organizations should embrace a culture of continuous feedback. One effective method is to hold retrospectives after major projects, allowing teams to discuss successes and areas for improvement in real-time.
Video Description: In this video, we explore 7 reasons why annual appraisals can be a complete waste of time, highlighting alternative strategies for performance management.
Embracing OKRs and Project Feedback
Transitioning to regular feedback mechanisms can enhance employee performance. Objectives and Key Results (OKRs) should be set for shorter timeframes—ideally 90 days or less. This approach focuses on measurable outcomes rather than vague goals, providing employees with clarity on their progress.
Introducing Job Scorecards
To further enhance motivation and performance, consider implementing job scorecards. These provide a clear framework for expected performance levels, ensuring that all employees understand what success looks like in their roles.
Using scorecards has proven transformative for many organizations. Each role can have its own specific scorecard, clearly outlining the metrics that determine success.
Video Description: This debate addresses whether performance reviews should be abolished altogether, providing insights into modern management practices.
Establishing a Behavioral Framework
Having clear core values is crucial. A behavioral framework can help clarify the behaviors expected from employees, facilitating more productive conversations around performance.
The Importance of Regular Check-Ins
Finally, implementing weekly one-on-one meetings is a vital step towards effective performance management. Research has shown that regular check-ins can significantly boost productivity and engagement.
By shifting from annual reviews to weekly discussions, managers can become coaches, helping employees assess their progress and address challenges more effectively.
Written by business growth coach Dominic Monkhouse. For more insights, visit his website or check out his book, F**k Plan B. Dominic is the Founder and Director of Monkhouse & Company, specializing in coaching high-growth tech firms. For inquiries, email him at [email protected].