Are Annual Performance Appraisals Disappearing?

November 9, 2015 in HR Best Practices, News



The following article appeared in our parent company’s e-newsletter, HR Insights. Strategic Human Resources Inc. ponders this question and provides insight on delivering meaningful employee reviews. 

In an article in The Washington Post, several major firms reported they were either eliminating or drastically revising their annual performance reviews.  While the cheers from employees and managers might be deafening, HR is no doubt shuddering.  How will we evaluate performance and determine salary adjustments and promotions?

But the subtle distinction here is that while some firms (such as Accenture and Deloitte) are eschewing the annual performance review, they are actually ramping up ongoing reviews for employees.  In large international consulting firms, the change makes sense.  Employees are constantly evaluated by their clients, project team members, and project leaders.  By using these timely evaluations, they are able to quickly give feedback to their employees and foster the developmental dialog in a real time manner rather than waiting for the annual review process.

Giving timely feedback to employees about their performance and overall career path is invaluable.  One of the biggest complaints we see coming from employee surveys of small businesses is the lack of feedback from the managers.  Employees want to know how they are doing and the lack of timely feedback and good dialog with their manager can cause even more long term issues and overall job dissatisfaction.  Annual performance reviews were initially implemented to force dialog between an employee and their supervisor at least once a year.

Perhaps Accenture’s CEO Pierre Nanterme’s recent interview with The Washington Postwill help clarify this new approach to performance appraisals.

“And for the millennium generation, it’s not the way they want to be recognized nor the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years, you lose them. We’re done with the famous annual performance review, where once a year I’m going to share with you what I think about you. That doesn’t make any sense. Performance is an ongoing activity. It’s every day, after any client interaction or business interaction or corporate interaction. It’s much more fluid. People want to know on an ongoing basis, am I doing this right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management.”

In evaluating whether this change makes sense in your organization, consider these essentials:

  • Preparation is key to ensure the employee feels valued.
  • Outline the objective of the discussion to put the employee at ease and let them know what to expect.
  • Encourage candid discussion.
  • Be clear where the employee stands in regard to future growth, salary review, and promotion.
  • Provide positive praise and recognition.
  • Wrap up the discussion with a mutual understanding of the performance and development opportunities.

Establish goals and objectives, whether it is quarterly, semi-annual, or annual.

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