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Why yearly performance reviews are dead [and what you should be doing instead.]

It's hard to believe that most companies still use the archaic yearly performance reviews method. This outdated strategy has been shown to have hardly any correlation with job performance, yet it is still widely used by organizations across the world.

The traditional review process includes a formal evaluation of an employee's work performance and goals at one time a year. It uses a standardized format for documenting the feedback so you can compare this year against last year's review as well as against other employees in your company.

But given the rapid pace of change and the adaptability mindset needed, we all know how productive this system is - not very!

There are a few reasons why the yearly performance review doesn't work anymore and can’t possibly be fair or well-measured:

1) People change the way they work or their projects evolve over a year, so their feedback loop should ideally be more frequent

2) A typical annual performance review lasts one to two hours. In this short period, it’s practically impossible for an employee to get a clear picture of their strengths and weaknesses. Also, it’s very challenging for managers to gauge what employees need to excel at their job and for their growth.

3) Yearly performance reviews pick up issues that are often too late to fix and the damage is already done in terms of employee morale or cultural behaviour and the resulting impact on productivity

The yearly review process is long overdue for a major overhaul! To stay relevant with the times and keep up with the new model of work, companies need to move to continuous performance management.

John Doerr in his book “Measure What Matters” refers to this process as CFR (conversations, feedback and recognition.)

Empowered managers now have the opportunity to continuously give feedback and coach their employees regularly. It creates an open channel of communication and establishes a ‘feedback culture’ where people know they can speak openly about what is going well or not so great.

Here are a few ways to achieve continuous performance management:

1) Managers set up short informal weekly check-in sessions (15-30 mins) with their direct reports. The meeting agenda is set by the direct report.

2) Dedicate more time (45-60mins) for deeper conversations once a quarter. Managers to include a goal/objectives/results agenda point to see how their direct reports are doing vis a vis their goals.

3) Provide real-time feedback to your direct report/s right after a meeting, brainstorm, presentation or completion of a project. Highlight what they did well or could have improved on.

4) Managers can gather feedback from peers about the direct report ahead of the check-in sessions and bring up any issues highlighted or give positive feedback.

In the age of transparency, it is important to be open and honest with your employees. It's not just about what you do well, but also how you could improve.

Building a feedback culture in the organization with a continuous performance management process will boost morale, elevates performance, create highly engaged employees and helps grow your business into something great!

To your transformation and success.

Ashok Miranda

About the author

Ashok Miranda is a Business Transformation Architect and founder of Transform and Transcend, based in Singapore. He is the author of the book Culling Cuturitis: How To Rid Your Company Of This Toxic Disease and Build a Winning Company Culture.

Ashok is a much sought-after consultant, professional speaker and trainer and has helped businesses (startups, SME's and MNC's) reach their full potential and rise to greatness.

He has helped transform the mindset of thousands of businesses professionals across the region.

Ashok is driven by his passion and purpose to architect a better business world. He is on a mission to help companies be massively successful in these turbulent times by building winning company cultures that foster happy and engaged employees. Building strong and emotionally resonant customer-centric brands and designing transformative customer experiences that create ultra-loyal customers and true brand fans.


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