While it’s natural to dread the discomfort of being evaluated, or indeed to do the evaluating, constructive feedback is vital to the ongoing development of employees, can bolster the employee-manager relationship, and provide guidance for recognition, rewards, and incentives, as well as course-corrections. That said, as helpful as they might be, it can still be difficult to structure and conduct them correctly. And, if your current schedule and methods for employee reviews aren’t turning out the results you might be hoping for, it’s easy to question if you’re performing them correctly and with the right frequency.
Are Annual Reviews Outdated?
The annual review is what springs to mind for most people when talking about employee performance reviews, but everyone has their own interpretation of what an annual review looks like. Usually, these are pretty boiler-plate conversations about job performance, goals for continued professional development, establishing new objectives, recognizing accomplishments, and discussing room for improvement. If this review process can indeed strengthen the employee-manager relationship, improve the setting and maintaining of goals, and remedy key shortcomings, it sounds like an effective, if not vital, process. The seemingly contradictory problem? This type of annual review might be at once too standardized and too subjective. Although ideally conversations about goals and performance, they can easily fall into the trap of being far too one-sided and grade-focused.
The fact is, more than 9 out of every 10 managers aren’t satisfied with how performance reviews are conducted, and an equally large majority of HR leaders agree that the process doesn’t even yield accurate information. Within these same findings, we also learn that performance ratings don’t actually speak to real-world results, and are therefore altogether poor sources for informing decisions involving rewards and other employee dynamics. Furthermore, the frequency itself of the “annual review” is called into question, with mounting expert consensus that nothing occurring annually, goal setting, progress evaluating, weakness highlighting, etc. can be effective on such an infrequent timescale in such fast-paced environments.
Overly Standardized and Subjective
To understand why performance reviews are so boilerplate today, we need to look back fifty or sixty years to their origins. Back in the ’60s and ‘70s companies began to really embrace methods of review like the five-point scale. This was, at the time, a seemingly effective solution to deal with the sheer scale of the new workforce as it exploded in those decades. It was simple. This method of evaluation could be widely doled out to a vast number of workers, and the straightforward data collected therefrom could be easily interpreted, crunched, and used to inform all manner of decisions. One major problem: it’s purely subjective what separates a 3 from a 4 or a 4 from a 5 when it comes to vague competencies that are only measurable subjectively like “assertiveness” or “dependability,” etc.
Even if these grading scales are accompanied by descriptive rubrics that might detail that a 5 is reserved for “exceptional performance” while a 4 is used to denote “above-average performance,” those very concepts are themselves subjective. If one of the major goals of the employee review is to extract useful and accurate data, multiple layers of subjectivity are going to make your employee reviews incapable of meeting that basic goal. At the same time, even if there could be confidence that the data itself was indeed accurate by somehow surmounting both levels of subjectivity, how informative, after all, can a five-point grading scale really be? Is a grade of a number from one to five really capable of or even conducive to reflecting over improvements since the last review session? Recognizing specific accomplishments? Setting new goals? If an employee, for example, receives a grade of 4 out of 5 for “teamwork,” what, if any, are the prescriptive implications therein? “Next time try to go from “above average” to “exceptional.” And let’s say that there was indeed demonstrated improvement by that same employee, that doesn’t even necessarily mean that the grade will change. Likewise, just because someone receives a 5 in a certain concept area, it doesn’t mean that improvements can still be made, it just means that the grading scale is incapable of reflecting it if they are.
These inherent problems are especially highlighted when we recognize that the same grading scale can be, and very often is, applied broadly to multiple different job categories. How can we expect accurate or informative data when we apply the same grading scale to a marketing team member as we do to an IT department head? There’s no built-in emphasis within rigid grading scales on the specific needs and responsibilities of the job itself. While both skills may be required by both parties to some extent, the former may need to be a team player far more than the latter, who may need leadership skills far more than the former. Experts suggest that, rather than rigid grading scales like the five-point scale, we should build the review from the individual job description up. Doing so can avoid the garbled data feed problem by removing the useless data altogether. Instead of trying to fit the round peg of subjectivity through the square hole of standardization, one answer to the ever more pressing question of data reliability for standardized reviews is to destandardize them.
Of course, these reviews can become even more subjective, but now the subjectivity is useful, and not just for the manager, but for the employee as well. While it may be useful to neither party even to somehow accurately determine whether or not an employee rates as a 4 or a 5 in terms of “assertiveness,” for example, if instead the review process as a whole were structured around the job description itself, employee and employer alike could come to better understand how the employee is relating to the specific requirements, expectations, and core competencies of their own position. How is the employee setting and meeting the goals of the position? How have they exceeded expectations? How might we want to move on from and adapt the original job description if and as the work evolves? etc. Which brings us to another one of the common failings of the typical annual review.
The current trend with employee reviews is ditching artificial performance ratings in favor of more authentic means of assessment. Rating employees with a number or by any other simple and rigid category ranking doesn’t just produce useless data, it can also be demoralizing. Essentially, the more one-sided your employee reviews are, the more likely that you will end up with the very opposite of your intended goals. Remember, an effective review process can help reward achievements and virtues, incentivize future accomplishment, identify room for improvement, and strengthen the employee-manager relationship and overall employee commitment, so the last thing you want to do is waste valuable time and resources only to adversely impact all of those key areas of employee growth.
But the review process isn’t only something that can make employees anxious, it can also be a major source of anxiety for the managers who perform the reviews. The fact is, although communication and leadership skills are essential for organizational effectiveness, the majority of businesses aren’t regularly training their managers in these crucial skill areas. Of course, managers may tend to be more skilled in these areas than the average person depending on the rigor of the hiring processes or promotion criteria in each individual case, but we still need to depend on these managers to carry out performance reviews in a way that avoids easy pitfalls like one-sided evaluation. With so much of business being focused on the end result, it can be easy to lose sight of the fact that the delivery itself can be as important as the content being delivered. Extracting data is far from the only goal of an employee review, and the process itself can have a meaningful impact on employee performance and growth outside of the mere information gleaned. Which is just one of the reasons why the style, structure, and language employed in the review process itself can help steer you towards those positive outcomes and away from the negative.
Ideally, managers should be given opportunities to continue to strengthen their communication and leadership skills when necessary, which would have not only a positive impact on employee reviews, but benefits that can permeate the rest of their responsibilities as well. If continued training isn’t necessary, managers should still receive specific instruction on how to conduct employee reviews, namely that they should conduct employee reviews more like a conversation than an evaluation. Otherwise, encouraging goal-setting becomes a demoralizing list of demands, discussing shortcomings can feel like an attack, etc. On the other hand, if you guide the conversation naturally toward goals and areas that might need more attention, you can arrive at these conclusions jointly, and be that much closer to achieving the positive outcomes we all hope to achieve through employee reviews, and avoiding the negative outcomes that are all too common.
Not an Effective Frequency
Although a great number of managers still swear by annual reviews, one of the major reasons for their downfall is frequency. The simple fact is that reviews occurring annually are too far out of step with modern business to be effective. These days, business simply moves too quickly for annual reviews to be either informative or actionable. Goals set at the beginning of the year might be drastically different from goals even a few months later. Further, it can also be difficult to meaningfully discuss an entire year’s worth of employee performance all at once, and it’s easy for reviews to be biased toward recent memory, recent achievements, recent setbacks, etc. even though employee performance and engagement during the rest of the year is just as important. At the same time, you don’t want employees to feel like they’re under the microscope, or to be wasting the time of employees and managers alike by reviewing too often.
The Frequency Solution
Knowing all of the problems of reviews that take place annually, the intuitive solution might be simply finding a comfortable middle-ground — a frequency that is neither too far apart so as to be impacted by recency bias and shifting goals, nor too rapid and thereby wasting time and resources and making workers feel micromanaged. It’s certainly possible to strike that balance so long as you are willing to dedicate the time and effort needed to hone in on what that balance is for your particular business and your particular employees. That said, whether you swear by the annual review, or think quarterly reviews work best for your business, there are ways to solve all of the inherent problems with review frequency through revitalizing your entire review structure, and layering your review process. What this means is that, whether you want to conduct the reviews themselves annually or more (or even much more) frequently, you should also go beyond the mere review.
Full-scale employee reviews are a great chance to take a deep-dive into employee performance, engagement, and goals. But if they’re only taking place once a year, you’re going to lose out on a lot of the benefits therein, and might be fighting against shifting goals in a fast-paced business landscape. So, while you conduct your full-scale reviews once a year, you can also have shorter goal-oriented review sessions several times throughout the year, even within the same quarter depending on the nature of your business, as well as shorter, more casual check-ins about things outside of goals that may change throughout the year, or need to be praised or addressed without waiting for recency bias to set in. Finally, ongoing performance metrics/praise/feedback through incentive programs, email, or specific engagement applications will help you keep one finger on the pulse of your employees, as well as continually boost engagement and drive through ongoing incentivizing.
Casual, more regular, meetings outside of the performance review can help acclimate employees to regular feedback and minimize the anxiety associated with the review process as a whole. This multi-pronged approach also leaves available the opportunity to conduct full-scale reviews more frequently in place, perhaps, of one of the shorter check-ins.
The crucial thing to remember is that this approach is modular. It’s adaptive. That should be your key takeaway here. There is, unfortunately, no golden ratio when it comes to review frequency, and many factors, such as organizational culture, manager-to-employee ratio, length of employment, and pace of business will all need consideration to inform your individual review frequency.
In Summary: The Ideal Review Structure
Unfortunately, there is no perfect review structure. What one business swears by could be disastrous for the next. That said, there are some key things you should remember when formulating your new review structure or improving your old one.
Ditch Grading Scales
Grading scales can leave your employees unhappy and your data inaccurate. Focus instead on more authentic forms of evaluation.
Conversation over Evaluation
One-sided evaluations aren’t great for inspiring employees, but conversations, even those that arrive at the same conclusions, can help both parties work through the aspects of the review in a way that is much more conducive to positive outcomes. Feedback still should play a vital role, but if your employee review is limited to feedback alone, you will miss out on a lot of the potential of this process.
The Layered Approach
The ideal review frequency may be elusive because the individual components themselves, such as offering feedback, setting goals, and incentivizing, have different ideal frequencies. One solution is to conduct a full-scale review, but then follow up with the component aspects based on the rate those individual components change/need to be discussed.
Find Your Frequency
A business that has been in operation for fifty years and is mostly staffed with seasoned employees is going to have different review needs than a startup that is continually adapting and responding to a brand new and ever-changing market. Don’t be afraid to hone in on a review structure that works for you.
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