From the Archives: Stick a Fork in Annual Performance Review Systems

While I’m traveling, I thought I’d re-post one of the most popular Data Point Tuesday posts from 2012.  Enjoy.

Today’s data points come from two recent surveys:  one from Achievers and one from Cornerstone OnDemand.  Both surveys show clearly that annual performance review systems’ time has come.  It’s over.  Time to stick a fork in them.

Well, it’s time to stick a fork in them if you’re interested in providing the kind of feedback to your employees that is focused on growing their skills, binding them closer to the organization and engaging their full and discretionary energy.

Let’s look first at the Achievers data.  As part of a survey fielded in April of this year, employees were asked how frequently they would like to receive feedback from their managers.  HR professionals and CEOs were asked how frequently they thought employees in their organizations would like to receive feedback from their managers.  Do the answers surprise you?

No surprise that employees would like to receive feedback immediately or on the spot – or at least weekly.  Maybe a bit of a surprise that both HR professionals and CEOs know this.  Here’s the question, though:  if employees, HR professionals and CEOs all know that employees don’t want feedback in an annual context, then why are the majority of performance feedback systems in use today based on an annual model?

Making matters worse, Cornerstone OnDemand published survey results from late 2011 with related findings:

  • only 37% of employees report that they’ve been given useful feedback from their manager/employer in the performance review process
  • Only 32% said that their performance goals are aligned with their company’s business objectives
  • Only 20% have established career goals with their manager/employer

So.  Annual feedback systems satisfy no one from a frequency perspective.  And feedback systems in general are not providing useful feedback for employee skill growth or engagement – or in line with business objectives.

At this point you could say, “Yikes!” and start moaning.

Or, you could say, “This looks like an opportunity for HR to make a significant contribution to the success of the business!” and start collecting similar data from your organization to identify whether this opportunity is real.  If it is real, I see the building of a compelling business case in your future – just in time for the FY2013 budget planning process.

And a new more powerful way to engage employees and manage performance in your organization could be right around the corner.

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19 Comments

Filed under Achievers, Annual Performance Reviews, Business Case, Business Success, China Gorman, Cornerstone OnDemand, Engagement, HR Data, Performance Feedback

19 responses to “From the Archives: Stick a Fork in Annual Performance Review Systems

  1. Thesе are actually fantastic ideаѕ in concerning blogging.
    You have touched somе nice things ɦere. Any way keep up wrinting.

  2. The results are of the survey should have been obvious for all those that manage people. Employees feel valued when feedback is provided. We all understand that there must be a process in which we provide an appraisal. It can be either semi-annual or annually. Employees expect to be rewarded for their efforts. Now, you are missing the second part of this survey. You have the ideal, now what is the actual? The #1 reason why leaders do not provide the immediate feedback is because of fear. They fear confronting their employees concerning the behaviors which need to improve. Leaders must learn the skills necessary to effectively confront for results. Without these skills, the lack of immediate feedback will continue. Do you know who to effectively confront ?

  3. Pingback: Hey Boss! You Missed More Than an Annual Review » Make HR Happen by Tom Bolt

  4. Pingback: Hiring is Broken |

  5. Pingback: Performance Review is OUT. Organisational Influence is IN. « Anna Rydne Communicate (your) Skills

  6. Turning the annual review period into a real-time feedback loop is a great idea, but when you take into account the administration of documenting all of it and tracking real progress towards development goals, the burden becomes a lot larger than a conversation in the hall. In my company, we hit upon a way of tracking development goals in real time and providing weekly feedback by automating most of it. The system harvests skills practiced and work habits by mining the data we already produce in project teams. It’s worked quite well on internal projects and we just released it to the public. Find it here: http://propstoyou.com

    • Looks interesting. I think technology is finally catching up to this critical need. The coming together of Social, SaaS, the Cloud and HCM provides powerful new tools. Now we just have to be risk takers and start to implement them.

  7. Pingback: Why Is ‘Just-in-Time’ Performance Feedback So Hard To Do? | Culture Sleuth

  8. Hi China. I agree with the premise of your post. However what seems to get lost in the debate about performance reviews is that I doubt any company has ever designed a performance management process that encourages feedback being provided only once a year.

    Most performance management processes provide for at least two formal performance review discussions a year but are built upon the need for regular and timely feedback all year round. So the performance review isn’t the problem – the real issue to be resolved is why regular feedback isn’t being provided, no matter what the actual performance management process is.

  9. So the question remains… What type of method would “forward thinking” HR Managers use them for tracking employee performance and feedback?

  10. China I agree. It’s time for a change. The annual review system has been in place so long for a couple of reasons. One, it has always been tied to and driven by the merit increase process. Secondly it’s human nature to procrastinate on performance feedback, especially when it’s negative. So we, HR and senior leadership, have to change the organizational culture to where true performance improvement is the goal and performance feedback is ongoing. Managers must view themselves as coaches. Then the compensation side of the equation should take care of itself.

  11. I’ve found, somewhat ironically, that HR can cling to the traditional process while the rest of the business wants to move away from traditional, look-back annual appraisals.

    The fear from HR professionals is that reviews are their domain and they want to continue to control the process – for example, moving to an immediate feedback culture would loosen HR’s grip on the process. Of course, any “strategic” HR leader would embrace (and even drive) the changes that employees and managers want to see to get more detailed, real-time performance feedback.

    One of the main benefits of accelerating the performance review cycle is “no surprises” as Kelly rightly pointed out in her comment

  12. I think the other important thing to remember is so many times an annual performance evaluation becomes a hyper-critical “this is everything that is wrong with your performance” and the 3% raise, with emphasis placed on everything that was wrong.

    I can’t tell you how many times I have been blindsided by an annual review, or have friends and coworkers who had no clue things were as bad as the annual review made them out to be. Couple that with the advice given to job seekers to look at past performance evaluations to prepare for finding a new job, and you have a recipe for an overly negative view.

    Additionally, I think most people would like to receive both constructive criticism or discipline as well as positive reinforcement or praise on a more regular basis. If you do get the overall positive review, it’s a lot nicer to hear that regularly rather than only once a year. I’ve found a couple of organizations that are notorious for once a year praise, coupled with what feels like daily criticism.

    There is a balance to be had somewhere.

    • HI Kelly: it’s true. Annual systems often lead to the kind of experience that blindsides employees. As with most things in organizations, the breakdown is at the supervisor/manager level. Providing tools that make it easy to give constant constructive and actionable feedback and recognition would solve LOTS of organization issues.

      • Hi China, I absolutely agree with you.
        Would you consider that a tool, which integrates with everyday tasks, and provides a social platform, can enable regular/contextual feedback and recognition? If it can provide a list of tasks, results, feedback and recognition for the entire year, can it become an objective basis for evaluation at the end?

      • I think it depends on the tool. But there are some new ones coming out that start to address the issue. I’m a big fan of Achievers in this regard.

  13. The question of “Why” is not rhetorical. It even goes beyond “We’ve always done it that way.” The answer is a combination of allocation of resources: mental, financial and transactional. Somebody has to identify the problem (which you have done beautifully) and then do something about it. Training managers and employees requires a commitment on the part of CEOs to give it more than lip service or accepting performance appraisal as a necessary evil. Employee attitudes (which we have created) are one of dread rather than eager anticipation of receiving the keys to improved performance. They should be lined up to demand honest appraisal. Managers who view employee feedback as a chore need to be retrained or replaced. Finally, the whole HR concept of employee hierarchies has to be discarded in favor of something less mechanical. People aren’t things to be sent out to metrology for calibration and then move on to the next project.

    More to come…I started writing an article on Performance Appraisal Killers but it is difficult to edit it down to something productive that doesn’t sound like a cynical rant. You are right! Stick a fork in the way we do it now and cook up something better.

    • Hi Tom: thanks — as always — for your thoughtful response. If we could change cultures so that managers are constantly giving actionable feedback and recognition, then we wouldn’t need annual systems at all!

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