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- Experts say that the conventional performance review is an outdated and ineffective way to manage teams.
- 90% of HR workers don’t believe the evaluations provide accurate information.
- Ongoing feedback allows for better transparency, morale, and the ability to resolve performance issues quickly, especially for hybrid teams.
Everyone hates performance reviews.
The yearly evaluation forces workers to wait all year to discuss a promotion, or potential performance issue. And they’re not just anxiety-inducing for employees—managers dread them, too.
Supervisors often suffer under the emotional burden of giving a poor review.
And even when they’re giving positive feedback, they’re forced to recall and compile a year’s worth of their employees’ achievements and shortcomings in a short period of time.
“No one really likes to rank themselves and write about their own successes and shortcomings. You’re doing it once a year, you’re trying to remember what you did, because this is your one chance to try and to get a bonus,” Dan Kaplan, senior CHRO client partner for Korn Ferry, a consulting firm, tells Fortune. “It’s a very clunky, cumbersome, time-consuming, uncomfortable process.”
Reviled though they may be, performance review season is in full swing. Many companies, especially in the financial services and legal industries, still stand by the process.
But experts Fortune spoke with say that the conventional performance review is an outdated and ineffective way to manage teams.
Instead, they recommend a shift that’s already in motion across corporate America — ongoing timely feedback, something that has become especially important for remote or hybrid workforces.
“Most people hate [performance reviews] and most managers hate them,” Kaplan says. “It’s done that way because it’s always been done that way. But what many really good companies have been striving for is to drive continuous feedback.”
The trouble with annual reviews
There are several reasons why companies love performance reviews.
They are a routine check-in that addresses work issues and creates a structured timeline for promotions. Employees have the stage to advocate for themselves, and voice what skills or projects they want to prioritize in the future.
Performance reviews also force managers to broach uncomfortable conversations, and share tough feedback they might have been holding onto.
But annual evaluations are wildly unpopular among both workers and managers.
About 66% of employees were strongly dissatisfied with their organization’s performance reviews, and 65% believe that the assessment wasn’t even relevant to their jobs, according to a 2015 survey of Fortune 1,000 companies from the Corporate Executive Board, which is now a part of consulting firm Gartner.
But what’s more striking is that the same report found that 95% of managers say they aren’t satisfied with their company’s performance management processes, and 90% of HR workers don’t believe the evaluations provide accurate information.
90% of HR workers don’t believe the evaluations provide accurate information.
“Some people are just uncomfortable talking about themselves. Then there are people who are really concerned that their good work may not be seen, that they may not be valued, or the compensation they’re going to be receiving is not commensurate with their contributions,” Karen Niovitch Davis, CHRO for Prosek Partners, a marketing and communications firm, tells Fortune. “In my generation, it was ‘Don’t ask, don’t tell.’ Put your head down and do your work, and they’ll let you know if there’s a problem.”
The goal of the annual review is that employees are rewarded for their contributions throughout the year, and course-corrected if they’re not on the right path.
But instead, these evaluations can serve as let-down: employees are surprised by negative feedback, or soft-fired by a manager who wants to get rid of them for any number of reasons.
“If you’ve waited all year and your annual review is that you’re a terrible performer, shame on company management for letting you go all year and not know it,” Kaplan says. “That essentially is an indictment of leadership, that you have not communicated to a poor performer other than once a year. And for sure, the trust goes down.”
Consider continuous feedback instead
A growing number of companies are replacing traditional evaluations with continuous manager feedback.
In 2016, Accenture did away with the annual meeting and instead directed managers to give timely employee feedback after completed assignments.
In 2022, Yahoo scrapped its biannual process in favor of supervisors habitually checking in on their direct reports.
Lisa Moore, chief people officer at Yahoo, told Fortune earlier this month that the company decided to do away with “big emotive moments. And instead we’ve gone to continuous check-ins.”
That shift away from annual reviews has been accelerated by the COVID-19 pandemic. Around 65% of companies did annual or biannual performance reviews in 2018, according to a report published that year from Workday, a cloud-based software company.
But a separate study from Workhuman found that in 2022, only 49% of workers had annual or biannual evaluations in 2022. That study found that 38% of organizations now conduct employee assessments on a quarterly or monthly basis.
There are a few reasons why continuous feedback is becoming the new normal.
For the many managers overseeing remote or hybrid teams, repeated check-ins can catch any potential issues that would be more apparent in office settings.
Plus, the evaluation strategy is more flexible, which may be a better cultural fit for many employers operating on hybrid schedules.
“With people being remote under COVID, it became that much more important for more regular discourse and feedback,” says Kaplan. “You have HR organizations that have become more respected and credible that are now saying, ‘We’ve always known that there’s a better way. Now let’s push it.’”
Ongoing feedback allows for better transparency, morale, and the ability to resolve performance issues quickly.
It also makes managers understand their employees more as people, and that rapport can be crucial for both people, as well as the office as a whole.
“The biggest advantage is you build trust, and you start building real team bonding,” Susan Stehlik, professor of management communication at New York University Stern, tells Fortune.
A side effect of continuous feedback is that supervisors are more likely to transform into coaches rather than task managers.
Bosses are forced to keep a closer eye on what skills workers need to develop, or where there are new growth opportunities. Employees have more opportunities to express their career aspirations, and work with their higher-ups on hitting those goals.
Written by Emma Burleigh for Fortune as “The case against performance reviews: It’s time for bosses to throw out the ‘clunky’ annual critique” and republished with permission.
