Most businesses traditionally conduct annual employee performance reviews. And, traditionally, most businesses and employees fail to get much value from them. It's time to rethink how your organization assesses your employee's work performance.

Typical companies in the U.S. tend to fall into two large groups: those that have annual reviews of employees to assess performance, and those that don't. A smaller but growing segment are those organizations that have determined that these (typically) poorly executed reviews yield little or no benefit. 

In addition, most managers and supervisors tend to dread the process. Part of this is due to the time involved, but mostly it is from a dislike of confrontation and the broad lack of training or effective tools.

Do Annual Reviews Really Matter?

According to a column at Forbes.com,

Research has suggested for years that yearly evaluations don’t affect performance much, if at all—perhaps in part because they tend to reflect the biases of the reviewer more than anyone’s actual job performance, especially when it comes to how women are rated. No wonder, then, that lots of companies, including IBM, Adobe, and Microsoft, have overhauled their performance-appraisal systems, ditching one-a-year employee evaluations in favor of continuous feedback in real time.

However, only about 10 percent of companies surveyed in the Willis Towers Watson 2016 Global Talent Management and Rewards Survey had either stopped conducting annual reviews or planned to do so by the next year. Yet, their survey indicated that only 63 percent of respondents believed that yearly evaluations benefited anyone.

This view is supported by research that suggests that yearly evaluations don’t affect performance much, if at all. Part of the reason is that they tend to reflect the biases of the reviewer more than the employee’s actual job performance.

So, why even consider having performance reviews?

Any manager knows that if you want to improve something it must be measured. The cycle of tracking, review, assessment and adjustment applies to workers just as much as it does to systems or processes. This, of course, implies the existence of a baseline of performance that can be used to make the needed assessment and, if needed, direction for improvement.

But a major weakness of an annual review is that a brief meeting to ostensibly assess over 2,000 hours of work performance is impractical. In addition, there is the danger of the process being seen as impersonal and judgmental. The anxiety around typical performance reviews is great for both the employee and the manager. 

Another weakness is that most companies offer little or no training for the managers and supervisors tasked with conducting these reviews.

Engaged Employees Make Better Employees

An alternative to the "one-off" annual review is to have a more holistic process that involves regular and continual input and feedback, and intentional efforts on the part of management to foster employee engagement. 

A recent Gallup quarterly survey on employee engagement shows that the biggest factor for engaged employees is having “a manager who seems to care about me as a person."

In this type of performance assessment process there is no "annual" review except, perhaps, to advise an employee of a promotion or annual pay increase. Instead, the process involves a regular routine of one-on-one meetings, weekly and monthly reviews, and documented performance and growth goals and objectives.

By scrapping the old approach to the annual review and adopting a two-way, coaching approach, businesses can benefit by increasing the degree of engagement among their employees and involving their managers in a way that truly matters. 

Tips For a Better Review

In the meantime, your organization may still be relying on the more traditional approach and you may want to improve on the actual review process itself. 

Here are some tips for doing just that:

[Illustration from thebalancecareers.com]

Ideally, your formal performance discussion meeting should not be the first time an employee is told about positive performance or a need for improvement unless it is new information for the manager, as well. This type of feedback should have come from managers throughout the course of the year. The objective during the performance meeting is to simply highlight and re-emphasize these assessments.

Obviously, this approach cannot be fully implemented suddenly in the fourth quarter of the year, but by beginning with smaller improvements and changes now you can set the stage for executing a far more comprehensive alternative approach going into the new year.

Finding Your HR Management Partners

Employee development, culture building and workforce management can all fall under the auspices of a company's HR staff. And oftentimes the tasks and demands can seem overwhelming. This is where having an alternative for your HR management can be highly beneficial.

Another key step in maintaining HR workload, while increasing your company's cost-effectiveness, is to consider outsourcing. A professional agency such as Accuchex can provide much-needed help with Human Resources needs and questions.

Accuchex is a full spectrum Payroll Management Services provider offering expertise in Time Management, Insurance and Retirement issues, as well. Sign up for our free "My HR Support Center" tour.