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Annual Review Hangover? Here’s the Day After.

Hangover Yes, it’s that time of the year again:  annual performance reviews.  Most companies like to get this done around Christmas time so that salaries can be decided for the following year.  This process is often dreaded by both managers and employees and results in a “hangover”.  Let me explain why.

Employees get nervous because they know the annual appraisal feeds into salaries, promotions, job rotations, and bonuses.  As a result the feedback and discussion often don’t feel right as the “salaries game” is played and employees want to have a good evaluation and be considered for salary increases, promotions, and bonuses.

Discussions around personal and company growth is really difficult as the discussion is usually focused around what was accomplished and whether goals were met.  Feedback received by the employee is often anonymous, lacking context, forced, delayed, and leaves employees feeling even more nervous and confused.  Employees become defensive, trying to explain their accomplishments.  Then they are forced to complete the forms for the goals next year.  Being put on the defensive, employees are happy when the review is over.

Managers have to face the mountain of forms, the collection of feedback, the forced discussions, and forced ranking of their employees to play the “salaries game” and make sure they are rewarding good performers but still motivating everyone.  Next to that the bottom performers need to be managed and tough discussions are forced.  Feedback received on an employee’s performance must be shared according to procedure.  Even if a manager is a good coach and is giving feedback throughout the year, the annual performance review forces a feedback event – usually employing a traditional 360° feedback tool – which does not provide accurate feedback as the “salaries game” is being played.  In the end managers have to follow the procedure, tick the boxes, force those discussions, and hope that when the process is over the team is still motivated to achieve next year’s goals.  It’s no wonder that there’s a “hangover” when it’s all done and everyone can’t wait until the performance reviews are filed away and forgotten for another year.

It’s a shame that this traditional process, which is over 100 years old, is still being followed by many companies who don’t operate anymore in the same environment that they operated in 100 years ago …or even 5 years ago!  Mostly companies continue with the traditional performance review process despite the fact that it’s disconnected to actual performance!

I followed a recent LinkedIn conversation about this when one of the contributors, Bill Spaulding, of Spaulding Associates said this:  “When I think about my own periods of highest achievement I cannot make any connection between those times and any performance review process. … Continuous feedback, teamwork and a sense of community are important …

Another member of this group even went so far to compare the traditional performance review process to the old DOS operating system:  “I’d like to share a metaphor as it relates to the traditional performance management system… Using the metaphor of DOS as an operating system. Which is not user friendly, cumbersome and does not encourage innovation and engagement. Introducing new operating systems and shifting to a coaching culture where employees bring value and get the results the organization is after. After all teams are together to produce results.”

Bruce Tulgan, author of the book “FAST Feedbacksays: “One of the most common complaints, …is that reviews take place too long after the performance being critiqued has occurred.”  Feedback needs to be FAST: “frequent, accurate, specific, timely”.

More and more companies realize that frequent and regular “meet-ups” or “check-ins” with managers are the way to replace annual performance reviews.  In these meetings the Manager, as a coach, focuses on the employee’s continuous learning by going over feedback.  Apps like Katch are used by the employee to gather continuous 360° feedback which feeds into the regular Manager-Employee meet-up perfectly. This is really how fast paced companies can use continuous feedback and meet-ups to replace the annual performance review.

In a publication for McKinsey & Company (August 2011), Robert S. Kaplan (professor at Harvard Business School) said: “While 360-degree feedback is very valuable, it typically occurs at the end of a year and therefore often lags in highlighting key issues. In a fast-changing world, you need a more active approach for getting coaching and real-time advice. … I would encourage you to overcome some initial discomfort in order to take greater ownership of getting feedback.”

And what about salaries you’re thinking?  Kelly Services abolished the performance review process replacing it with Manager-Employee conversations focused on feedback, development, goals and career.  Salaries were determined by the positioning of employees (by leadership) within a market adjusted salary range.  This makes sense.  If a manager is having regular meet-ups with an employee and the employee is sharing continuous feedback with the manager, it becomes rather easy to determine where in the salary range an employee should be placed.  This placement is actually improved with more meet-ups and continuous feedback and learning.

It’s time now to stop finishing the year with the traditional performance review hangover. Abolish it and all the related forms and procedures and replace it with tools like Katch and manager-employee meet-ups. This way you and your co-workers will get the feedback they deserve and need, to avoid the nasty hangover of the annual performance review end of 2014.

Sandra Corbeau, business developer / investor in Katch

Otbert de Jong, Katch Asia


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