Should You Ditch Annual Performance Reviews?

By: Nancy E. Peterman, Partner

Have annual performance reviews become passé?  A recent article states that “more than four-fifths of firms are ditching standard year-end performance reviews and ratings, including Goldman Sachs and General Electric.”  Keeping up with the times, General Electric is now using a mobile app in its new process to provide more timely feedback to employees.  Employees and their supervisors can log in at any time to provide feedback.

Years ago, there was a movement toward “just-in-time” feedback, which encouraged in-the-moment responses, both positive and negative, to employee actions.  One of the problems with this approach was the need to document such interactions and to weight them accordingly to how great a factor such occurrences were in the overall performance of the employee.

Development operations lend themselves to a “just-in-time” approach.  With most organizations tracking a host of activities ranging from number of calls, significant interactions, face-to-face visits, to number and total dollars solicited and closed, it becomes easier to address employee success (or lack thereof) continuously.  But this often leads to complaints that success only is defined in quantity, and that the quality of the work may be lost in chasing even greater numbers.  Some have reported that the review of individual metrics led to a lack of coordination and cooperation internally, as some development officers have been known to compete with each other for prospects.  In addition, the soft skills, such as certain behaviors, are not subject to the objective counting of tasks.  There are a number of universities that are setting both team goals and individual goals in order to foster collaboration.

A 2015 Gallup poll stated that 63% of employees surveyed felt that their bosses did not recognize their achievements.   Finding ways to reward and recognize performance continuously is an important motivator and leads to greater employee satisfaction.

Just like with training pets and raising children, feedback given months later is useless.  Using metrics to provide regular progress updates toward targets and coupling that with personal interaction with the supervisor provide a better understanding of expectations.  Development is a relationship business: treating employees with courtesy and encouragement while critiquing performance can – and should – be a hallmark of our industry.