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Are Annual Performance Reviews Pointless?

In my employer’s organisation, few of us look forward to February. It is the month of Annual Performance Reviews, an activity viewed without enthusiasm by both reviewers and reviewees alike. It doesn’t help that it has to be fitted in alongside the day job so if you have more than a few to do (and write up afterwards) they are quite disruptive and a lot of effort.

The process followed by my employer is common, especially among consultancy firms. We all obtain written feedback from our direct line managers, which is reviewed against a set of objective criteria and some personal objectives set at the previous year’s meeting. How well we are judged to have done contributes to our next pay rise (if there is one…). We then have a short chat about future career aspirations (which the company is often not in much of a position to satisfy) and more objectives are set for the next year. In theory we are all supposed to work towards meeting our objectives through the year, which aren’t set in stone and are varied to suit changing circumstances. Of course most people don’t actually give them a second thought until about a month before the next review.

Many people argue that this sort of review should be dispensed with altogether, as counterproductive. The majority of my colleagues view them as at best a box-ticking exercise, and at worst a charade.

Many of the arguments given against reviews are against specific aspects of the process, rather than carrying out a review as such. One common complaint is the practice of ranking all staff, especially if the outcome has to fit a forced bell curve distribution. This is divisive and demoralising, especially as most people over-rate their own performance. William M Fox argues that effort should only be made to solicit ratings for the extreme performers. My own experience is that we spend a lot of time arguing over the difference between those either side of the above/below average dividing line, only then later for them all to be dragged down arbitrarily when some HR bod decides we still don’t have enough “below average”. This group are the ones whose morale is most undermined by this type of process, despite often having put in a perfectly acceptable performance, usually barely distinguishable from their peers who are judged “above average”.

By contrast, I have found that if the performance rating is based on a more objective measurement (e.g., have I met agreed objectives?) it is more widely accepted and I have been able to sell the idea to staff.

A more convincing argument against annual reviews is that all feedback on performance should be given directly, at the time. This is hardly a new idea – for example it’s espoused in The One Minute Manager written in 1982. But it’s much easier said than done. I’ve rarely received any direct comments on my work as I’ve done it, and most of the time (even now) I’ve really had no idea how my day-to-day performance measures up. Of course the reason for this is obvious – most managers are under a lot of time pressure, and however well intentioned, never find time for quick discussions with their staff.

This reason alone makes a strong case in favour of holding Annual Performance Reviews – managers are required, annually, to discuss and record the performance of their teams, even if they do nothing during the rest of the year. It’s also a good thing to be able to have a chat about our own work with someone who knows us, especially (following the model used by many consultancy firms) they are somebody independent who can give a wider perspective.

Of course, as reviewees, we can always take matters into our own hands. I surprised my own manager last year by requesting a one-to-one – he was quite relieved when he found that I had no motive except to review how I was doing against my job specification and objectives and to see if there was anything I should work on to improve. Of course, most of us are too lazy to do this unless we are forced to; even if we aren’t it’s hard to find time and easy to keep putting it off.

So, just as usefully, an annual review forces us once a year to interrupt our own busyness and take stock, when we might otherwise never get round to it. I have found it a good opportunity to identify a few things I can work on in the year ahead, and I don’t necessarily feel I need to discuss them all with my manager.

So, however imperfect, annual reviews are worthwhile if we use them to measure our own progress and see how we can improve in the year ahead. If you are required to have one, make the best of it!

More information

Kenneth Blanchard and Spencer Johnson (1982), The One Minute Manager, Collins/Fontana (1983 edition)

The trouble with Performance Reviews, an article in Business Week setting out some ways to do it better.

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