It’s time for the annual performance review process: managers are wracking their brains to complete all of the paperwork; employees are stressed out thinking about how to condense a whole year of accomplishments into a few sentences and a 30-minute conversation, and HR is languishing in deadlines and details to ensure the entire process goes off successfully.
And all of that requires significant time and resources. It has been estimated (conservatively) that the process costs a 500-person organization about $120,000 each year and a 5,000-person organization over $1 million.
But to what end?
According to research from CEB, about 66 percent of employees say the performance review process interferes with their productivity; 95 percent of managers say they aren’t satisfied with their organizations’ performance management processes; and 90 percent of HR professionals don’t believe their companies’ performance reviews provide accurate information.
Appealing to Mediocrity…
The annual performance review—which traditionally is a one-sided conversation driven by scores, grades or a ranking system—often appeals to three groups of employees:
…While Risking the Most Valuable Talent
By evaluating performance on an annual basis—instead of in real-time—you could actually be hurting your organization and driving away top talent. In today’s workforce, the highest performers are looking for a clear understanding of their purpose, real-time feedback on what’s working (and what isn’t) and measurable accountability for their work—as well as regular insight into development and advancement opportunities.
Annual performance reviews can still be part of how companies assess employees, but they cannot stand alone. Couple them with real-time feedback and recognition and ongoing coaching to ensure mediocre employees improve and rock stars stay engaged, productive and with your organization.