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Spotlight on ... 'Tis (not) the season for annual appraisals

November 23, 2021

Why it's time to ditch annual appraisals

It's that time of year when many businesses begin their annual appraisal rounds.  Seen as an opportunity to review the year and provide (allegedly) 'constructive feedback' it is common for employers to dedicate a lot of time to annual appraisals.  

Taking a step back for a moment, have you asked yourself the question "what is the purpose?"  Typically the answer to this would be 'to improve employee performance and engagement'.  Secondary to that might be 'to generate better customer service' or 'improve revenue generation'. So this might surprise you...

"58% [of executives surveyed] believe that their current performance management approach drives neither employee engagement nor high performance".
"According to a survey of 48,000 employees, managers and CEOs ... only 13% of employees and managers, and 6% of CEOs, think their organisation's performance appraisal system is useful."
Businessman being depressed by accounting in his office

So what's so wrong with annual appraisals?

  • Cause stress and anxiety for both employee and manager
  • Can serve to reduce engagement and motivation
  • Time consuming with no real positive effect
  • Belated feedback becomes irrelevant
  • Creates a one-way street reminiscent of school reports
  • Focuses on the negative
  • Usually rigid in structure

Is there an alternative?

  • Absolutely.  Provide employees with regular, informal and timely feedback or 'check-ins' as well as strategic objective planning. This is also called Performance Management.

Why is this approach any better?

  • Feedback is relevant and focused on supporting employee performance and development
  • Removes barriers (time, stress, red tape) to enable productive conversations
  • The process is current, proactive and forward-looking
  • Actual Managers give real feedback on recent events
  • A flexible process develops trust and empowers the whole team.

Who else is doing this?

  • Netflix - They ask 3 simple questions to all employees - What should I stop? What should I start? What should I continue?
  • Adobe - Trust-based approach with fluid, regular check-ins - employees are seen as their own career managers, whilst managers receive training on delivering feedback to drive development.*
  • Deloitte - After identifying that they spent 2 million hours a year (1,190 weeks!) on annual appraisals it was time for change - reviews now take place quarterly or at the end of each project and consist of just 4 questions.

*Following their overhaul, Adobe cut voluntary employee turnover by 30%, but also increased involuntary departures by 50% because managers where required to have 'tough discussions' with struggling employees instead of putting them off to the next appraisal.

What should I do next?

If you've already got annual appraisals booked in, don't panic!  Make sure they have purpose and focus on the future.  Try to keep them informal if you can and ask your employees about how they are getting on and what the future looks like to them.

Whether you are still doing annual appraisals or not, it is always time to look at your current processes to see if they are fit for purpose.

"When organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers." Valamis

Can you afford to miss out?

Please get in touch with us now and we can help you re-visit your Performance Management for 2022.

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