Are annual Performance Reviews dead?

As we are heading to the ‘traditional’ performance review period – how will your organisation handle them this year? Will you still have them, cancel them or postpone them?

Is there still a place in today’s ever-connected world for the annual performance review?

Many high profile companies  like Adobe, GE, Accenture, Deloitte, IBM and Netflix  are saying no.

Pointing to annual reviews as time-consuming and resource-sucking, they’re shifting to a more agile approach.

And in some cases, they’ve dumped the scaled rating system all together (you know, an annual rating from 1-5 for each KPI).

Here’s their reasoning:

In a Harvard Business Review article, Netflix’s Patty McCord stated: “If you talk simply and honestly about performance on a regular basis, you can get good results — probably better ones than a company that grades everyone on a five-point scale.”

In the case of Deloitte, they found that creating an annual rating of 65,000 employees took close to 2 million hours!

They also criticised yearly goal setting, arguing that goals need to be set and adjusted much more frequently: 

“Our design calls for every team leader to check-in with each team member once a week…These brief conversations allow leaders to set expectations for the upcoming week, review priorities, comment on recent work, and provide course correction, coaching, or important new information.”

So what am I saying here? Is the annual review a redundant process from a by-gone era, ready to be written off and forgotten, just like the fax machine?

Not exactly. You need to adopt what works for your business.

As a company, you need to define and clearly communicate to your team how you want to handle:-

  • Performance Development Discussions
  • Career Discussions
  • Salary Reviews and
  • Staff Check ins (touchpoints and/or staff satisfaction/engagement surveys)

As for Performance Management – this should definitely be dealt with as and when required (as opposed to using the annual performance review to initiate this discussion).

With our clients we have a whole range of variances subject to their objectives and resources however generally our recommendation is a mixture:-

  • Performance Development Discussions – set up 90 day sprints and 30 day check ins – use this to provide performance direction and discuss any performance or conduct issues.
  • Career Discussions – annually or every two years, set up career direction planning discussion to map out growth over the next 3 years.
  • Salary Reviews – this needs to fit your industry, budgets, types of roles and team expectations. Even if there is no increase, salary levels should be reviewed at least annually however (particularly salaries that are close to award levels as from the 1 July each year, awards are reviewed).
  • Staff Check-ins – this should be conducted at least annually but can vary whether it is 1 on 1 more informal check ins or wider, more structured surveys.

Need help with any of the above. Don’t hesitate to reach out to our BespokeHR team to help.