Time to get rid of the Annual Performance Evaluation

After over 25 years of professional Human Resources consulting with companies on performance management systems and compensation plans, I support eliminating the annual performance evaluation.  They just don’t work,  are disliked by most everyone involved, and even when done correctly actually have more negative impact than previously believed.  You’ll be hearing much more on this in my future articles, workshops and blogs.

The latest studies in brain science support what most of us have known instinctively for years.  The annual performance review provides feedback which often worsens performance, decreases motivation and does not serve the purposes for which it is intended.  The story below illustrates this.

Yesterday, I had a conversation with a long time friend/colleague. She’s a professional woman who works for a very well known, mature, successful Silicon Valley high-tech company.  She was upset about her annual performance review recently given by her manager.  My colleague is a high performer, well liked and respected by her peers,  highly-regarded and often re-hired by past managers, and simply a delightful person to work with.   She received a rating of 3 out of 5. Not bad, except no one has ever received a 4 or 5 from this manager.  While 3 may equal “meets expectations”, it feels like “average”, i.e. not that great.  She received a couple of 2′s (“below meets”) which, after she shared her side of the issues, were promptly moved up to 3′s.  The manager seemed unaware of her employee’s project results and rated her in error, which were changed to her credit. Also, a major project my colleague completed early in the year was not reviewed or even discussed. The good news,  the employee did receive a substantial merit increase, but it didn’t seem to correlate with the “meets” rating received.

Epilogue:  My friend felt the manager had no idea what she did; the manager did not ask for peer (or the employee’s) input prior to the review;  the review did not reflect the entire year;  and it had little impact on the so-called merit increase granted.  But that’s not the worst part.  Today, the employee feels under-valued, unappreciated for her contributions,  completely unmotivated, no longer engaged in her work, and has begun to look for another job.

These elements are not unique and I have heard similar complaints for years from employees at all levels in organizations.  Just as blood-letting ceased to improve a patient’s health and often made it worse,  perhaps it’s time to give up this archaic practice too.

This entry was posted in Employee Engagement, Employee Management, Employee Retention, Motivating Employees, Performance Discussions, Performance Management, Performance Reviews. Bookmark the permalink.

2 Responses to Time to get rid of the Annual Performance Evaluation

  1. Roxie says:

    I also believe reviews should be eliminated. They are like report cards in school and who liked waiting for those?

    Conversations are the most important and valuable part of the job. You are learning and receiving candid feedback without it coming back to bite you. We are at the job to get it done and would like to be appreciated for our results. Everyone can do something better, but not everyone is given the same feedback since managers styles also differ, bringing on another issue. Let employees do the job and give them ongoing feedback without worry.

    With all this said where does it leave pay for performance? Is it pay for company performance?

    • cherryllsevy says:

      You touched in several key issues in your post. Conversations, candid and timely (and at least occasionally face to face) are essential in a successful work relationship. Call me old-fashioned! Praise, recognition and honest feedback to identify ways to improve are also key to a thriving work environment. These all can be achieved regardless of the manager’s personal style. Adapting the manager’s style to that of the employee can ensure communication that is both heard and understood. The typical performance evaluation form is a one size fits all and much like clothing does not fit anyone well.

      Clearly defined and understood goals and performance standards are the basis of pay for performance programs. The actual performance of the employee periodically compared to these, can be recognized and rewarded (or not). Employees must also be clear on how their individual performance is aligned with the company’s performance and plans can and their performance incentive plans should be designed to reward both individual and company performance.