The Annual Review Process is Broken. Here’s How You Can Fix it.

New approaches to the process empower managers to align workers’ goals with business priorities.
By: | October 23, 2018 • 4 min read
annual review process

For some time now, there has been a dissonance about the best way to evaluate employee performance while also keeping them engaged and productive. Research has routinely found that once a year, bi-annual or even quarterly check-ins aren’t enough. What’s needed to properly assess employees and ensure they’re engaged in their performance is continuous performance management—a term that has led to some confusion and mistakes in implementation.

According to industry experts, the drawback to the term continuous performance management is that it paints an “always-on” mentality for managers and places unnecessary burden on them to be the sole provider of employee feedback.

“That’s the wrong approach—it’s important for employees to have continuous feedback, and the way that you implement it is critical,” says Sari Wilde, vice president of the HR practice at Gartner. “If you place all that burden on managers it won’t happen—employees will get the wrong kind of feedback.”

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She adds that skills, requirements and jobs are changing rapidly, which requires continuous feedback, but this shift isn’t just for managers. Everyone must be on board to make a successful transition to continuous feedback.

According to Doug Dennerline, CEO of BetterWorks, continuous performance management isn’t just repackaging the dreaded annual review by conducting it more often. Instead, continuous performance management focuses on goal setting and alignment to business priorities.

“We all know that the annual review does not work to improve performance, nor does it deliver needed business outcomes of the development and retention of top talent,” says Dennerline. Continuous performance management flips the annual review on its head, he says, by replacing a once-a-year headache with an ongoing cycle of lightweight, timely conversations between managers and employees around what matters most: Goal setting and alignment to business priorities (at least quarterly), feedback and coaching from managers and peers, career development paths and recognition of their impact on the business.

Enabling Continuous Feedback

At Workday, the performance management culture shift has been underway for a few years. Cristina Goldt, vice president of HCM products at Workday, says the company calls the reformed process “performance enablement” and leads by example—it uses its own software internally to turn practice into reality. She says that annual reviews, by design, look at the past, but performance enablement looks to the future.

“With performance enablement, you can look at where an employee wants to go and where the organization is heading,” says Goldt. “From there, you can easily align the two to help facilitate the appropriate steps to move an employee, and the company, forward.”

Performance enablement is designed to put control back into the employee’s hands. Indeed, they can initiate a conversation without waiting for their supervisors, thus alleviating some pressure from the manager’s shoulders.

For any such program to be truly effective, however, managers need to learn their place in the hierarchy of performance management. According to Wilde, Gartner research finds that the most effective leaders are what Gartner calls connector managers.

“These managers provide targeted feedback and coaching based on employee’s needs, but then they do something that’s unique,” says Wilde. “They connect employees to other individuals and opportunities for the right kinds of development. When someone isn’t positioned to provide that feedback, a connector manager actively connects employees to the right kind of coaching and development opportunities, instead of trying to do it themselves.”

She also notes that connector managers have a greater impact on talent outcomes. Gartner has found that connector managers increase the impact on employees’ engagement by up to 40 percent, intent to stay at the company by up to 20 percent and discretionary efforts by up to 38 percent.

Michael Rochelle, chief strategy officer and principal HCM analyst at Brandon Hall, says it’s also imperative for managers to understand what employees are taught for continuous performance management to be successful.

“Most organizations don’t have a strong connection between knowing the curriculum and the objectives of learning for employees,” says Rochelle. “When managers understand what their employees are learning, they are in a better position to coach an employee or suggest other learning. And turning managers into great coaches and mentors is a lynchpin for a great continuous performance management program.”

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