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Should Your Organization Ditch Annual Reviews for Continuous Feedback?

Think back for a moment about how you felt the last time you sat down to receive an annual performance review. Not great, right?

If you’re like most of us, you were nervous and vulnerable leading up to the meeting.

Now, think about how you felt afterwards. Were you a little annoyed and irritated, even if much of the evaluation was positive?

If so, you’re not alone.

In fact, many employees see no benefit to annual reviews, and managers often hate them, too. And there are serious questions about their effectiveness at actually gauging employee success.

For those reasons, many companies are getting rid of annual reviews. In their place, they’re moving to other models to assess progress, including gathering feedback more frequently and less formally, in a system often referred to as “continuous feedback.”

Could a similar system work for your company? Here’s what to consider.

The Problems With Annual Reviews

There’s a lot of variability in the way that companies hold annual reviews, and some approaches are better than others. However, annual reviews generally tend to have the following problems:

They’re time-consuming

They may take just an hour or so of each employee’s time. However, it takes the reviewer even longer, since they have to prepare the documents and process the paperwork. And when you multiply that across every employee in the company, it means that full days or weeks are spent on reviews each year.

They’re (often) one-sided

All healthy relationships require good communication and some give-and-take. Traditional performance reviews have been totally from the perspective of the manager, with little participation from the reviewee. This can feel unfair and cause resentment, which can hurt productivity. One-sided reviews can also unnecessarily limit the conversation and overlook helpful insights that employees can offer.

They can feel subjective

Unless review processes are crafted carefully to measure progress consistently and objectively, it can feel like they’re done completely at the whim of managers — which is often very much the case. This Harvard Business Review article cites research that employee ratings were often more influenced by the employee’s similarity to the reviewer than their actual performance.

They can hurt employee performance

As humans, we’re wired to focus on the negative. Many annual reviews that rank or rate employees and fail to focus on ways to grow leave employees demoralized and frustrated.

They don’t make it easy for employees to improve

When you only officially check in on an employee’s progress once a year, employees might not know whether they’re actually on track to meet or miss expectations. If employees are struggling, they should get help long before an entire year passes. And more frequent check-ins can make sure goals are clear, even as priorities and projects shift throughout the year.

Reviews can be “gamed.”

If reviews are the basis for annual raises, people will often try to do whatever it takes to move their numbers, regardless of whether they’re really improving or acting in the best interest of the organization.

Free download: 3 Tips for Getting the Most Out of a Continuous Feedback System

Introducing Continuous Feedback

First, let’s clarify the actual aim of the feedback that annual reviews are supposed to deliver. For most employers, they serve the dual roles of holding employees accountable for their work and identifying opportunities for their development.

Accountability and development have shifted back and forth as top priorities over the years as workforce needs have changed. Most recently, though, employers’ most pressing needs are to retain good employees and keep them happy and productive.

Annual reviews aren’t always great for that, as we just explained. Checking in more frequently and on a more natural schedule is a better alternative.

How HR departments are using continuous reviews

As HBR explains, “Ideally, conversations between managers and employees occur when projects finish, milestones are reached, challenges pop up, and so forth—allowing people to solve problems in current performance while also developing skills for the future.”

This approach can remove the bulk of the paperwork, the one-sidedness, and the chance of blindsiding employees that come along with annual check-ins. It also shifts the focus of the meetings from the employee’s past behavior to their future goals, which is arguably more helpful for everyone.

Although some worry that removing performance metrics makes the evaluation process more subjective or prone to unconscious bias, it’s worth noting that bias still exists, even when metrics are used. In fact, it’s these kinds of measurements that are good at revealing exactly which biases are at play in your office.

Plus, adding continuous feedback doesn’t mean you need to completely eliminate annual reviews. Some companies find it helpful to have conversations about goals and workplace problems completely separately from the meetings that dole out merit-based rewards and consequences.

In fact, discussing performance more organically throughout the year can potentially make employees and managers feel more confident in the rationale behind the eventual rewards (or lack thereof) that they get annually.

It can feel a little overwhelming to consider making the switch away from annual reviews if your HR department is fully entrenched in the annual review system. But the shift doesn’t need to happen right away or all at once.

Don’t miss: 3 Tips for Getting the Most Out of a Continuous Feedback System

Fixing Your Workplace Culture

It may seem like quite a feat to encourage your managers to have MORE conversations with employees if it was already a struggle to get them to do it once at the end of the year.

Part of the reason continuous feedback feels easier is because the conversations don’t have to be as complex and thorough as they do for an annual review.

But if there’s still a feeling that organic conversations have to be forced, there’s probably a deeper problem at play in your workplace culture. Switching to continuous feedback might be a step in the right direction, but it certainly isn’t a panacea. A continuous feedback system can’t single-handedly create a culture that values direct communication.

Consider the following:

  • In your office, do people feel like they can let each other know what they’re really thinking? Or are they tiptoeing around each other, talking behind each other’s backs, or keeping their ideas to themselves because they don’t think they’ll be listened to?
  • Do employees regularly work together to find what’s in the best interests for everyone at the company, or are they just trying to one-up each other or manipulate the system to get more for themselves?
  • Have managers been trained to welcome negative feedback and criticism, or are they still responding to those things in ways that alienate their colleagues?

You’ll need to fix the underlying communications issues in your workplace if you ever hope to give employees truly helpful feedback.

Want to give employees truly helpful feedback? Fix the underlying communications issues in your workplace first. Click To Tweet

And you can bet that if the CEO or head of the company doesn’t buy into the feedback process, it won’t work for the rest of the staff.

If you want to work with expert culture-change partners to ensure that communication and development are central values in your workplace culture, contact us at ELI. We work with employers of all sizes to create civil workplace cultures that were built to last for the long-term.

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