It is that time of year again, time for the dreaded annual review. There are only a few basic ways that companies approach these. At its worst, a manager fills out a form filling out a set of standard questions about your performance. If you have a good manager, there should be no surprise. She will simply repeat the perception that she has provided you already.
Next comes what I call the regurgitated review. This is where the employee has the opportunity to fill out a standard form revealing their perception of their performance over the previous year. I call it regurgitated because whatever you write is often the basis if not directly copied and pasted into your annual review conducted by your manager. Again, this should be no surprise.
One of the more effective annual review processes I have seen is the 360 degree review. In this approach, the managers complete an annual review of their subordinates and the employees complete a review of their manager. This sounds a little better on the surface but my observation is that this approach can create cross-motivation to inflate the reviews. “Your scratch my back, I’ll scratch yours.”
Recently, I sat with a group of people from several companies when the subject of annual reviews was the topic of discussion. It was quickly apparent that the overall view of the process was negative, with the exception of the fact that some generous raises were the result in years past.
A few strategic questions however really highlighted how wasteful this exercise can be:
1) Time – Of those that had to fill out self-assessments, the average was about 3.5 hours of effort to complete their portion of the review. Of those that were supervisors, they reported 2-4 hours per review. Imagine how much time is spend in Fortune 500 companies collectively!
2) Disconnect – Generally, each participant in our discussion use to believe at one point that the quality of their review would have a direct correlation to the size of their raise or bonus. However, the recent business slowdown proved otherwise. For a number of these people, while their personal performance remained steady or actually increased and improved their pay remained flat or was even reduced. With one exception, pay for performance didn’t apply in 2008!
3) It is too late! – Assuming there is a performance concern with a given employee an annual review is not the time or place to address it. It is like managing a business through a rear-view mirror. Any issues should be addressed in a timely manner.
As a manager, what I really care about is not what you have done for me in the past, it is what you will do for me in the future. We shouldn’t be wasting out time with annual reviews, we should be focusing on previews. But I would like to go one step further. With the dynamically changing landscape that many businesses face, I’d like to do quarterly or even monthly previews. Each employee should list what they expect to accomplish in the next period. How much are they going to sell, how many papers are going to be completed, or how few mistakes will be made.
An annual or more frequent preview would be a great tool to establish clear understanding of expectations of an employee and the expectations of the resources that a company will provide to support these goals. Previews would help drive performance instead of measuring it after the fact. Previews would render the review obsolete.
Readers: Do you have annual reviews and what do you think about the process? What am I missing with the concept of a preview, does the idea have merit?