The approaching end of the fourth quarter historically has meant managers and HR professionals are busy completing employees’ end-of-year performance reviews. However, in recent years, that traditional approach to performance management has been falling by the wayside.
Annie Rosencrans, people and culture director, U.S., at HR tech provider HiBob, says companies have “realized the annual review is pretty antiquated” over the last decade.
Research from Workhuman supports that assessment: More than 80% of employees surveyed in 2016 said they received an annual review—a figure that stands at less than half this year.
“Increasingly, HR leaders are recognizing the limitations of the traditional end-of-year or annual performance review as a component of true professional and capability development for their employees,” says Shaun Spearmon, director at management consulting firm Kotter.
In its place, HR and managers are turning to more continuous and “in-the-moment” feedback cycles, which, experts say, is a more realistic driver of employee performance and can also help employers meet employees’ evolving expectations. However, they caution, pivoting away from traditional performance management necessitates that leadership embrace a mindset shift and leverage a well-articulated strategy.
What’s driving the need for continuous performance management?
While employers’ reliance on annual reviews was already falling, the pandemic greatly accelerated the trend, as managers of newly remote workers turned to weekly or even daily check-ins with their team. That increasing cadence influenced both how managers assessed performance and how employees expected feedback—and went hand in hand with the changing nature of the employee-employer relationship during the pandemic, says Rosencrans.
“Employees today have an expectation of autonomy that they didn’t in the past,” she says.
On top of that, younger generations entering the workforce today are used to immediacy, especially when it comes to feedback; after all, these are the employees who grew up in the social media era, where feedback is just a click away, says Spearmon.
“In the same way that the number of ‘likes’ quickly determines whether that newly posted profile picture is a hit or miss,” he says, “employees expect a rapid response from their leaders around their contributions to the organization and the impact they are having.”
Employees are also growing more comfortable speaking up about company practices that aren’t working. And Gallup research shows that annual performance reviews are high on that list: Three-quarters of workers surveyed said such reviews are inaccurate.
“The idea of waiting until the end of the year and then dumping a load of feedback on someone is a notion of performance management that is … not ideal in terms of moving people’s performance forward or making them feel understood or valued by the company,” says Jennifer Dulski, CEO and founder of performance development platform provider Rising Team.
Best practices in continuous performance management
A successful continuous performance management strategy should speak to the failings of the traditional review—often applied with a “broad brush” across the organization, “without thought to the culture of the company” or how employees want to receive feedback, Rosencrans says.
That may look like quarterly or monthly check-ins with managers, goal-setting conversations once a month or even once a week. Importantly, Dulski notes that no “one-size-fits-all” performance review approach exists for any organization, team or individual.
Across strategies, however, there are a number of best practices that experts say can strengthen outcomes:
‘Feed-forward’ instead of feedback
Traditional performance reviews took a backward look at an employee’s performance over the year. Instead, Dulski advises, managers and HR professionals should pivot to a “feed-forward” approach.
“The idea is to focus on forward-looking options and solutions rather than backward-looking feedback—especially about concerns about which people can do nothing,” she says.
For instance, instead of telling an employee, “You’re always late to meetings,” recast the feedback to “Next time, I’d love it if you can try to be five minutes early to the meeting,” she suggests.
Committing to a “forward-looking dialogue,” adds Spearmon, enables managers to focus on key lessons about the employee’s performance and include that person in creating “an evolving development plan.”
Frame guidance positively
Dulski notes that Gallup research finds that employees who receive mainly positive feedback from managers are more than twice as likely to be highly engaged in their work compared to those who receive feedback focused on their weaknesses.
That’s not to say, however, that managers should avoid constructive guidance or gloss over issues, she notes.
“But a big part of doing good performance reviews is helping people understand what they’re doing well and what you’d like to see more of—rather than just where are the things they need to do better,” Dulski says. “They’ll make much more of an effort if you keep the ratio more toward ‘Here’s what you did well.’ ”
Respect varying preferences
Just as organizations are designing hybrid work policies to speak to how different employees like to work, they should create a review process tailored to their preferences, Dulski says.
As an example, she points to her experience on her high school and college rowing teams as the coxswain: the member who gives feedback to the rowers to coordinate their performance—in real-time and in front of the entire team. She quickly learned that some rowers wanted her to tell it like it was, while others responded better to more positive nudges.
So, she may tell one rower, “Your timing is too slow,” and the other, “You’re almost there, just a little faster”—essentially, the same message, just delivered according to what motivates them.
At Rising Team, leadership asks all employees to tell them how they personally prefer to receive feedback. Understanding that preference, she says, can help managers and leaders guide performance in a way that “makes it easier for employees to really hear you.”
Set clear expectations
When employees have a firm handle on their goals, and frequent feedback about how they’re working toward them, managers and employees can avoid the anxiety that often accompanies end-of-year reviews—when employees wait to hear how they’re measuring up.
Managers should be explicit about individual team members’ goals and how their success will be measured, and they should ensure employees know how to ask for support if they encounter obstacles in reaching their goals, Dulski says. To center goal-setting, for example, Rising Team leverages “contribution reviews,” where employees write their own goals at the beginning of the quarter and an outline for how they want to reach them and meet monthly with managers to “review themselves,” Dulski says.
“Then, by the time the manager is reviewing them, they’ve done this so many times that they’re clear on their goals,” she notes.
Bring a coaching mindset
When the annual review concept was more common, that was also a time when managers functioned primarily as supervisors.
“Now, because employees want more control, the [manager] has become more like a coach or mentor,” says Rosencrans.
That means that managers today need to rethink how they lead, says Jennifer Fickeler, head of the Coaching Center of Excellence at EZRA Coaching—who helped AstraZeneca build a coaching strategy into its performance management program.
“It’s about realizing that sometimes the natural way in which we lead can be more directive,” says Fickeler, noting that organizations that embrace a wider “coaching culture” have seen a “dramatic” increase in engagement—and, ultimately, retention.
Like all other aspects of modern HR, technology has a significant role to play in reshaping the performance review process.
Rosencrans notes that tech platforms like HiBob can store an employee’s entire performance history—making it easier to assess and track improvement over time—along with offering more seamless approaches for conducting 360 and peer reviews.
Relying on technology to “collate, collect and aggregate” performance data, Spearmon adds, gives managers critical tools to help drive meaningful review conversations.
“That’s going to be the future,” Fickeler says about incorporating technology into the performance review process. “It can give employees opportunities to interact with their leaders and managers on a more frequent basis and create ongoing learning and a continuous stream of information.”