Compensation, HR Management, Strategic HR

Performance Review Alternatives

Performance reviews are often dreaded by employers and employees alike. Managers put them off. Employees get frustrated. Holding only one major meeting about employee performance each year could even mean you’re missing out on valuable opportunities to help your employees perform better all year long.

While many of us hate them, we still tend to do annual performance reviews because it simply seems like the right thing to do. After all, we don’t want to give up that opportunity to provide feedback. And if bonuses are tied to performance objectives, there’s clearly the need to track and discuss such matters.

But with all of the pitfalls and frustrations associated with the annual performance review, you may be wondering what alternatives exist. Let’s take a look at a few options.

Alternatives to Annual Performance Reviews

Here are a few alternatives to the typical annual performance review:

  • Have shorter review periods, with much more feedback. In this alternative, the idea still stands: Employees have performance metrics, and there are meetings to discuss progress toward the goals. The big change here is that the meetings are quite frequent—perhaps quarterly, monthly, or even weekly—and are tied to smaller, short-term objectives. Pay can still be tied to performance, but bonuses are paid out in smaller, more frequent installments if so. This has the benefit of much more frequent feedback and takes some of the pressure off because it is more routine. It allows for frequent course correction as business needs change.
  • Train managers to give continual feedback. One of the biggest complaints about the annual performance review is that its very nature encourages managers to hold on to feedback for the annual meeting. That often means employees don’t know what they should change as the year goes on and may be unnecessarily continuing bad habits. A culture of frequent feedback can address this, and can be done in a much more informal manner. Frequent feedback can also be given for positive reinforcement, which can help employees know they’re doing well. Ensuring that feedback is given often can help employees know where they stand. In many ways, this option represents a move to viewing managers as coaches—coaches who help employees along the way. If considering this option, note that managers may need additional training to make this shift.
  • Use technology to give employees more input all year. Feedback apps currently exist that can be integrated with your existing systems. These apps can serve as a means for employees to solicit feedback from others or for managers to get advice on how to handle difficult situations. By having a lot of potential data points, these types of apps can help to build out a more complete profile for the employee and manager to utilize in employee development plans over time. (Be mindful of employee privacy concerns with this alternative.)
  • Conduct frequent reviews, but keep discussions about pay separate. This alternative separates the discussion about pay and bonuses from the discussions about employee performance. The benefit here is that it takes the pressure off during the meetings. Employees and managers can discuss progress without anyone’s pay on the line, and goals can be discussed more objectively. Of course, the drawback here is that this separation may mean the employer must find new means to keep employees motivated to work toward the goals. (It’s also possible to keep the pay-for-performance aspect but separate the discussion—it’s just tricky.)
  • Implement a 360-degree feedback program. Instead of a performance review that only takes into account the manager’s feedback, a 360-degree feedback program gets feedback from people who work with the employee across all levels. It gets feedback not only from the supervisor but also from peers, subordinates, and others as appropriate for that individual. The benefit here is there is less chance for individual biases to cloud the feedback. (Biased feedback is a problem with traditional performance reviews.) You could personalize this type of program by choosing who to involve in the process.
  • Implement your own hybrid of some of the above ideas.

If you’re considering eliminating the annual performance review, ensure you’ve got the structure in place for employees to still get recognition and feedback in some capacity.

These are just some ideas of possible alternatives. Have you tried eliminating the annual performance review process? What has worked for you?