What Scrapping the Annual Performance Review Looks Like in Practice

Recognize This! – Getting rid of the annual performance appraisal is only possible if replaced or supplemented with a program for informal, frequent and timely feedback and recognition from more sources than just the manager.

I’ve written a fair amount about the need scrap the annual performance review process as the sole means of employee feedback and goal setting. At the very least, such a formal, annual process must be supplemented by an informal, frequent recognition and feedback program in which any employee can give specific, detailed recognition feedback to colleagues in the moment.

Few take the step of scrapping the annual review out of fear of what would actually happen in practice. A recent Wall Street Journal article dove into that question, highlighting:

“While most continue to perform the awkward rite of passage [performance review] once or twice a year, a few companies—about 1%—are scrapping the formality altogether, according to the Corporate Executive Board. The thinking is that performance reviews are angst-provoking and even ineffective in actually motivating workers.

“Performance reviews have long received poor grades, even from those who conduct them. Nearly 60% of human-resources executives graded their own performance-management systems a C or below, according to a 2010 survey by Sibson Consulting Inc. and WorldatWork, a professional association. And one academic review of more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given.”

But you still need a feedback mechanism.

The fear of scrapping the annual review is quite valid if the trade-off is leaving employees in a feedback vacuum. More from the WSJ article:

“In place of reviews, the company [Atlassian Inc.] asked managers and subordinates to discuss performance and goals at pre-existing weekly one-on-one meetings. Feedback now goes both ways.”

That approach certainly makes feedback more timely. Such regular meetings also become an expected part of the routine, thus reducing the fear and anxiety associated with them. Again from the WSJ:

“When feedback is ‘not going to be used to judge you or your fate in the company, you are more likely to be open about where you need to grow and it’s going to be far more effective,’ says Dr. Coget of California Polytechnic State University, San Luis Obispo.”

Josh Bersin, head of Bersin & Associates, said essentially the same thing in a recent webinar (recording available) with my CEO, Eric Mosley:

“One of the problems is the annual performance appraisal gives managers an excuse to not provide ongoing feedback. The most valuable thing you can do to improve performance is to improve the quantity and quality of feedback. With Globoforce’s solution, you create a much more feedback-rich environment to create a much bigger and better culture of continuous performance improvement. Humans are much more open to positive feedback than negative. You need to create a reservoir of goodwill through programs like this that give managers more permission to provide negative feedback that will be heard.”

If you could, would you scrap the annual performance review? What would you do instead to ensure employees get the regular, timely feedback and recognition they need and deserve?

Derek Irvine

About Derek Irvine

The VP of Client Strategy and Consulting at Globoforce, Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their organizations. As a renowned speaker and co-author of "The Power of Thanks" and "Winning with a Culture of Recognition," he teaches companies how to use recognition to proactively manage company culture. Derek holds a B.Comm and Masters of Business Studies from the Smurfit Graduate Business School at University College Dublin.

4 Responses

  1. Josh says:

    I can’t agree more with this article. I think that most organizations thinking about scrapping the performance review are wondering what to replace it with. Ongoing feedback does increase the comfort in discussing performance, increase the trust between manager and employee, and most importantly increases performance through engagement. In order to completely remove the ineffective performance review, ongoing feedback is indeed a must. I’d even say its trading-up.

  2. Derek Irvine Derek Irvine says:

    Thanks for the kind words, Josh. I would agree – more feedback, more frequently given is definitely an improvement over current state in many organizations.

  3. […] organizations are in the final stages of their annual performance review process. According to an article in Wall Street Journal, up to 60% of Fortune 500 companies use a forced […]

  4. […] I’ve written before that there is a balance between ongoing feedback from multiple sources and annual feedback from one source. I’ve also written about what it would look like if you scrap the performance review. […]

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