HR Management & Compliance

Performance Management Evolves Beyond the Annual Review

Even the biggest fans of the annual performance review admit it has its flaws—such as assessing work and behavior months later through a rigid format that doesn’t always reflect true accomplishments and has a lack of nuance.

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Dissatisfaction with the traditional performance appraisal process led multinational consulting firm Deloitte to research and launch a new performance management process. This process eliminated “cascading objectives, once-a-year reviews and 360-degree-feedback tools” in favor of an approach that was “nimbler, real-time, and more individualized—something squarely focused on fueling performance in the future rather than assessing it in the past.”

“Once-a-year goals are too ‘batched’ for a real-time world, and conversations about year-end ratings are generally less valuable than conversations conducted in the moment about actual performance,” noted Deloitte.

Theory into Practice

When workers don’t get regular feedback from their supervisors, they tend to assume the worst. Even employees who are doing a great job can lose faith in themselves if they are not being given regular performance feedback.

Employees who receive regular feedback are more likely to be comfortable in their jobs and stay in them longer. That’s actually true even if the feedback is negative because employees feel they know where they stand and have something to work on. People don’t want to be in limbo; they want to improve their performance so they can succeed in achieving their goals.

If you come into work 3 minutes late a time or two without realizing that it’s your supervisor’s biggest pet peeve, it might skew him or her into thinking that the lateness is a symptom of a larger problem and create the impression that you’re lazy or bad at time management, even though it may have just been an outlier. It is in everyone’s best interest to address the problem before it happens consistently.

More frequent performance conversations and in-the-moment feedback help to create better work habits for all employees and also help to acknowledge high-performing employees.

Continuous Improvement

Every employee who starts a new position will have a learning curve. But normalizing regular communications about “what good looks like” and how to get there can make the process of correcting mistakes more palatable and instructional.

Consider two scenarios. In each case, the employee has handled 9 out of 10 actions correctly but slipped up on 1. By addressing it right away, the manager can put the situation in context: “You did great, and next time, if you handle this one situation in a different way, you’ll have it nailed 100%.”

But if a manager waits to address it, it becomes more complicated. The employee could continue to make the same mistake over and over. When the issue eventually is addressed, there is frustration on both sides.

As a manager, this creates the impression that you’ve been brooding over the issue for months. It separates the action from the consequence and reduces the potential for a satisfactory outcome.

Reinforcing Excellence

At the same time, high-performing employees may take a lack of feedback as a lack of appreciation. They may assume that their supervisor will tell them whether they’re doing a good job, so hearing nothing may create the impression that they’re not valued. They don’t know what behaviors to continue and where they may be falling short. Consistent feedback reduces the opportunity for misunderstandings.

Feeling undervalued could lead some of your strongest employees to look around. And in this labor market, they’re likely to have multiple job offers. They don’t want to be in limbo. Without feedback, they won’t feel stable and secure at your company. If their performance is particularly strong, you can use these conversations to prepare your employees for promotion by addressing any blind spots.

By having a continual dialogue, you can ensure the best-case scenario—no surprises at the annual review.

Ongoing Feedback Builds Engagement

Deloitte found in its testing a direct and measurable correlation between the frequency of performance conversations and the engagement of team members. For employers, especially in this hiring market, high employee engagement is a great way to encourage retention.