Is it Time to Retire the Annual Performance Review?

David Hassell in a recent blog (http://blog.15five.com/the-annual-performance-review-fail/) raised the question of abandoning the almost hopeless annual performance review.  A 2011 blog by Rachel Emma Silverman (http://blogs.wsj.com/juggle/2011/12/19/ditch-the-performance-review/) on the same topic is again making the rounds on LinkedIn. The natural question raised by both authors is: why cling to a grueling process that appears to add no value and may cause harm?

I can understand the appeal of "ditching" (to borrow from Silverman) the annual performance review: it is uncomfortable, notoriously ineffective, can cause long-term damage to relationships if not conducted correctly, and the less useless it is, the more time it demands from an already overly-demanding schedule.

I can also understand the appeal of regular informal feedback; we understand intuitively that this is the kind of feedback that is most helpful to employees.

If the annual review process adds so little value, and regular informal feedback is intuitively superior, why not replace the one with the other, as Silverman and Hassell, among others, have suggested?

There is a simple answer: because a lack of regular, ongoing feedback is precisely the reason annual reviews are so uncomfortable and ineffective. The annual review was never intended as a stand-alone process. HR leaders and organizational leaders have been preaching since the beginning of time that regular frank feedback is the foundation of the annual performance review. If we have not succeeded in inculcating the value of regular ongoing performance feedback after all this time, and with the specter of the annual review hanging over everyone’s head, then what makes us think we can inculcate that value without the annual review to hold managers at least minimally accountable?

Organizations measure and meet about what they care about. Financial data is regularly measured, reported on, and met about. Performance reviews and feedback are generally measured once a year with the annual performance review. As a result, regular ongoing feedback is naturally prioritized behind tasks whose pulse we take regularly. But at least we take the performance-review pulse once a year. When we talk about regular ongoing informal feedback, I understand that to imply that we will not be directly measuring this at all. It may not be the intent of such a plan, but the end effect, in a world of infinite demand and finite resources, is that performance feedback will become even rarer than it is now. And we can call this style of regular feedback informal if we like, but if managers do not regularly set aside blocks of time dedicated to reviewing the performance of each employee over the past week or so, it will not happen. Managers are already overburdened.

A point about how uncomfortable the annual performance review is. All accountability is uncomfortable, especially when it is not routine and regular. Performance reviews are accountability. They are crucial conversations. What makes the annual review unnecessarily uncomfortable is that we are accountable for discussing difficult issues that we should have been discussing regularly for the last year but have not.

If we have tools for motivating managers to provide regular, prompt performance feedback to their staff, we should by all means do so. But as a means of establishing a solid foundation for the annual review, not as a replacement for it. If we have the crucial conversations when and as often as we should, the annual review would become a capstone to a year-long process, rather than the too-late springboard for too-many difficult issues; an opportunity to step back and holistically review the conversations and trends over the past year, rather than the one opportunity to raise them too late.