Annual Performance Reviews Are Dead - Now What?

discussion performance
Stories
Catherine Maheux-Rochette
February 25 2021

I don’t believe in performance reviews anymore. I was talking to Sylvain, President of Folks and Go RH, looking for inspiration for my next blog post, when he came up with this thought. What? Why? I had just written an article on the subject, in which I praised performance appraisals and their many virtues for any manager who knows how to use them wisely, and I must admit I was shocked. He developed his idea. He no longer believes in the traditional, annual performance review, the approach whereby a manager meets with his employees once a year and evaluates them according to predetermined criteria. Those days, he told me, are over.

What Are the Disadvantages of Traditional Employee Performance Appraisal?

First, let’s define what a “traditional” performance appraisal is. A traditional performance review is when a manager meets with their employees once a year to evaluate them according to some criteria that are often identical to the ones used with all other employees in the organization, regardless of their role. It is not uncommon for this to be the only formal meeting between a supervisor and their employees.

Why Annual Performance Appraisal Just Doesn't Work?

It’s easy to find examples of performance review online, based on what others are doing, but for some businesses, this type of generic evaluation no longer works. Why? In an era of rapid change, everyone —and that includes employees —must continually adapt and be part of the change. Performance management has evolved and all these changes have been reflected in employee performance management and appraisal software.

Frequency

First of all, according to Marie-France Godin, human resources consultant at Go RH, we should talk about contribution assessment rather than performance assessment. With today’s rapidly changing work environment, there is almost always a gap between the prescribed work (job description) and the actual work (tasks performed). When assessing results, it is therefore necessary to look not only at what was expected, but also at the systems in place, the efforts made and the obstacles encountered—all factors that explain the results achieved and therefore the contribution. Performance is a continuous effort and, to adapt, employees need to receive feedback on a regular basis. “Hence the importance of ongoing meetings,” adds Marie-France. “We want to give ourselves every chance to reach our goals, and to do that, we need to talk often to be aware of what works and what doesn’t work so well and to correct the situation.” We need more frequent, smaller evaluations. Once a year is far from enough!

Too much objectivity, not enough subjectivity

In some organizations, we see performance reviews based on the same criteria for all employees, regardless of the nature of their work. For an employee to evolve and develop to their full potential, he or she needs to know what is expected of him or her in particular and constructive feedback. What are their objectives? What do they need to work on?

Participation of the employee in their development

In traditional performance appraisal, employees are not properly involved, and this is problematic because motivation often results from self-defined goals. Why is this? Self-determination theory has shown us that motivation is related to feelings of affiliation, autonomy and competence. [1] Thus, employees’ motivation is directly affected, positively or negatively, by the sense of autonomy they possess. The fact that an employee participates in the implementation of their goals and development plan will certainly have an influence on their sense of autonomy. Later on, achieving these objectives will increase their sense of effectiveness, and they will therefore feel more competent.

What Has Replaced Annual Performance Appraisals? Performance Evaluation 3.0, a Modern and Agile Model

3.0 Performance Evaluation comes from the Management Model 3.0, which aims to balance the relationship between managers and employees by including employees in the development of their career plans.

With this method, the focus is on goals, defined at a given frequency (monthly, quarterly or other), rather than on criteria, to motivate employees and increase their engagement. The aim is to better understand each other and collaborate more effectively within the company. This is an agile method, since it is based on adaptation and flexibility and takes into account the needs and expectations of employees and employers as they evolve.

Advantages of Performance Appraisal 3.0

The key: adaptation

The frequency of meetings between a manager and their employees with the Performance Evaluation 3.0 Model gives it the advantage of being adaptive. Goals can easily be adapted according to the results obtained, or even changed along the way if the situation requires it.

Awareness of skills

Returning to the theory of self-determination, this evaluation method allows the employee who achieves the goals he has set with their manager to become aware of their abilities and reduce their uncertainties, which will strengthen their feelings of autonomy and competence and, in turn, increase their motivation.

An increase in retention

According to Pierre Côté, founder of the IBL-T (Léger Index Happiness at Work), “happiness at work is an essential notion to attract, maintain and motivate employees, especially millennials, in a very competitive market”. [2] More frequent feedback allows for better management of employee development, which also contributes to increasing employee motivation, which is essential to happiness in the workplace. The more satisfied your employees are, the higher your retention rate will be!

Performance Review : So, What Works?

Marie-France Godin, human resources consultant at Go RH, explains the elements that, added to the need for flexibility in the process, are, in her opinion, essential to a good contribution review.

Alignment with values

The evaluation process must be aligned with the values of the organization. For example, a company that would want to emphasize teamwork and collaboration, but give large bonuses on individual sales representatives’ sales would have a process that is out of alignment with its values. It is important to reward behaviours within an organization to balance the individual and collective contributions of employees.

Ongoing evaluation

Ongoing evaluation gives employees a chance to correct themselves if they are not on the right track. Marie-France gives the example of school, where children have several exams each year, which helps them to get to know themselves and identify their strengths and areas for improvement. “Work is also a time for learning,” she says.

Sometimes employees need negative feedback (negative, yes, but constructive!) in order to grow. Although criticism is not easy to give or take, having difficult conversations is part of a manager’s job. It’s all in the way you say it. Here is an example of a meaningful performance review phrase to give in the context of an employee’s performance review:

“You may not have achieved all of the goals we set, but you overcame many obstacles to get there, and it’s a credit to you!”

Multiple goals

Goals must not only be related to the employee’s work. In fact, goals should relate to both soft skills and knowledge. The goal is for employees to grow in all areas; to learn new concepts, to learn how to apply them, but also to develop as a person (attitudes and expected behaviours). “To me, that’s what an effective review is all about,” Marie-France adds.

Here are some examples of performance goals related to soft skills:

  • Taking initiative
  • Accepting criticism
  • Demonstrate team spirit
  • Be respectful of the workplace

A common goal

When setting individual employee goals for job performance, it is important to keep the organization’s mission in mind. A company’s evaluation process should be based on a common goal between employees and the organization to avoid a disconnect.

Get your employees involved!

You have everything to gain by involving your employees. Question them, take the pulse of your organization. Conducting an employee engagement survey—and then developing an action plan based on the results—is always beneficial and can help you adapt your performance appraisal process! Psst… You can download our free employee engagement survey template here!

To conclude, I must say that after some reflection, I agree with Sylvain: traditional performance evaluation (or evaluation by criteria) no longer works, at least not for the reality of most companies in 2021. To make the most of the performance appraisal process —or contribution appraisals, as Marie-France Godin so aptly put it—we need to move towards a more agile method with continuous feedback and employee participation in setting objectives in order to increase their motivation.

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