Are You Thinking of Ditching Your Performance Reviews?

Performance review trends are changing. Here’s why some firms are swapping a traditional annual review for continuous and/or peer-based performance evaluations.

Employee performance reviews are the time-honored method for evaluating employee performance and pay, but many companies are doing away with the concept as we know it. Are they brilliantly progressive or setting themselves up for disaster? Read on to find out whos doing it and why.

Traditional Performance Reviews Can Be Problematic

It started with big companies like IBM, Dell, and Microsoft making the switch. Now everyone from Deloitte to Gap is doing it. If your company currently uses the standard model of yearly manager-led performance reviews, you probably understand firsthand many of the reasons they can cause headaches in a lot of different areas, but there are also likely reasons you havent considered.

Occasional Reviews are Time-Intensive

One of the biggest arguments against annual performance evaluations is that they take a considerable amount of time. In larger companies, managers find themselves spending one or two weeks per year addressing the review process.

A Performance Review Trend Shows Managers Have Negativity Toward the Process

Employee performance reviews are generally supposed to be thought of as positive. The employee does a good job, gets a raise, and goes on to do more great things but thats not what happens in real life most of the time. Instead, managers treat them as another task to get off their plates, which changes the mindset theyre conducted with. The employee is no longer the center of attention, but rather, is devalued because of the haste.

Good Performance Doesn’t Always Equal a Raise

Most companies tie raises to the reviews, but, in reality, its often HR and/or the economy that dictates how much of a raise is given. In other words, if the employee is amazing, he may not get a raise that corresponds with his performance if the economy is bad or theres a predetermined allowance for raises. This sends the message to the employee that he may not be rewarded for good performance, and it can kill morale.

The Reviewer Doesn’t Always Know the Employee or His Accomplishments

Many companies have a third party or HR conduct reviews. Not knowing the employees, its difficult to make an assessment. In companies where managers do the reviews, staffing changes make it hard to track an entire year.

Continuous and/or Peer-Based Performance Evaluations Serve as Alternatives

While traditional performance reviews can be problematic, employees still need feedback on how theyre doing. Its an essential component to keeping them motivated and the company moving forward. The answer, many think, is to replace the traditional model with one of two alternatives.

Continuous Performance Management

One emerging performance review trend is referred to as continuous performance management. Rather than having an annual review, employees meet with their managers during select intervals throughout the year. This give both a chance to address things while theyre fresh and employees to change things up if theyre underperforming. Occasionally, companies do this and offer on-the-spot bonuses for performance.

Peer-Based Performance Reviews

With the peer-based model, employees are asked to provide anonymous feedback about their coworkers. The aim to this is to get unbiased feedback, a broad scope of information, and to recognize employees for things that management might not otherwise note.

Get Help Designing and Conducting Performance Reviews

The right model will vary by company and management style. If youd like help exploring your review options, contact us today.


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