March 19, 2019

Annual appraisals stall growth. Continuous performance management spurs it

BY: Marcus Lambert
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People are your biggest strategic asset. So why wouldn’t you embrace strategies proven to unlock more value from that asset?

 

Continuous performance management isn’t theory. Some of the biggest, most successful businesses in the world swear by it.

 

But right now, many businesses still rely on annual performance reviews.  

 

That’s a problem because…

 

…annual performance reviews aren’t valuable  

 

The main point of feedback isn’t to chastise or praise. It’s to elicit action. To stop, change or continue a behaviour.

 

For feedback to be actionable, it must be timely.

 

But annual appraisals are not at all timely. 62% of employees say some or all of their previous objectives had become irrelevant by the time annual performance review rolled around, for instance.[i]

 

Which means annual appraisals aren’t valuable.

 

That’s why only 8% of companies believe traditional performance management methods drive value.[ii] And why only 14% of employees say annual performance reviews help them improve.[iii]

 

… annual performance reviews are stressful

 

Both managers and employees usually hate annual appraisals. When appraisals only happen annually, they become this big-deal event that both managers and employees find stressful.

 

Which isn’t great. Stress costs the US $300 billion in lost productivity, for instance.[iv]

 

And there’s an engagement cost too.

 

More than half of employees believe annual appraisals are a pointless and time-consuming HR requirement. [v] That is, it’s built for the business without regard for employees.

 

Which sends a pretty clear message. We don’t care about you; we only care about us. Not the message you probably want to send, if you care about building an engaged, motivated, productive workforce.

 

… annual performance reviews waste time

 

Time-consuming isn’t an issue if the activity drives value. But annual appraisals don’t.

 

At which point you’re not talking about time-consuming. You’re talking about time-wasting.

 

Which really adds up. Say one manager has to lead 30 annual appraisals for their team. Each annual appraisal probably takes about an hour – but then you’ve got preparation time too.

 

That manager might spend a couple of hours preparing for each. Collecting notes; talking to colleagues; structuring the conversation; working out improvement areas.

 

You start talking about three hours per employee. That’s 90 hours, or two-and-a-bit solid working weeks. For something that doesn’t add value.

 

… annual performance reviews hurt collaboration

 

Annual appraisals – especially rankings – encourage a dog-eat-dog culture. They pit your people against one another in the race for the “best” annual appraisal and subsequent rewards.


That’s a big deal, because it undermines people’s ability to collaborate effectively.

Something 75% of employers rate as ‘very important’.[vi]

 

Because teams who collaborate better are more successful. That’s why 97% of corporate executives, employees and educators believe team alignment directly impacts project outcomes.[vii]

 

If you care about building a productive workplace and meeting business revenue targets, annual appraisals don’t help. (They actually hinder).  

 

All of which means…

 

Annual appraisals aren’t just useless. They’re actively detrimental to your brand and business. 

 

So maybe it’s time to make the switch from annual performance reviews to continuous performance management.

 

Continuous performance management means moving from annual appraisals to regular conversations where managers and employees collaboratively set goals and review progress towards those goals.

 

It’s less formal, more flexible.

 

  • Employees love continuous performance management because they get constructive, timely, relevant feedback that helps them do better. And because they know what their boss really thinks.

 

  • Managers love continuous performance management because they don’t need hours to prepare. It’s just a conversation. And because it actually drives value, managers get job satisfaction watching their people grow.  

 

  • HR leaders love continuous performance management because it solves the annual appraisal headache. And it gives data to inform smarter, fairer people decisions. And cuts turnover and lowers recruitment costs. 

 

  • Businesses love continuous performance management because it improves performance, engagement and productivity. And it allows them to become more agile and adapt faster to market change.

 

Read more: Why should you care about continuous performance management?

 

The fact is, continuous performance management is a better way because…

 

Continuous performance management means continuous performance development

 

Continuous performance management does what performance management should do. It empowers your people to improve. It reinforces positive, on-brand behaviour – and deters poor, off-brand behaviour, in a constructive, long-term way.

 

Which means it’s the lynchpin to actually developing your people and cementing your culture.

 

Not just course-correcting their performance or giving praise where appropriate. But genuinely helping your people evolve, so they grow with and for the business.

 

And that’s how you unlock most value from your workforce.

 

TalTrack is a smart continuous performance management platform that makes developing your people easy. See for yourself in this short video – then drop us a line to get your free trial.

 

[i] PersonnelToday, ‘Over half of UK employees think annual appraisals are pointless and time-consuming’. 2017. Accessed March 2019.

[ii] Deloitte, ‘Performance Management is Broken’.

[iii] PersonnelToday, ‘Over half of UK employees think annual appraisals are pointless and time-consuming’. 2017. Accessed March 2019.

[iv] Health Advocate, ‘Stress in the Workplace’, 2009. Accessed March 2019.

[v] PersonnelToday, ‘Over half of UK employees think annual appraisals are pointless and time-consuming’. 2017. Accessed March 2019.

[vi] Queens University, ‘Communicating in the Workplace’, Accessed March 2019.

[vii] SalesForce, ‘Is poor collaboration killing your company?’ 2012. Accessed March 2019.

 

About the author Marcus Lambert

Entrepreneurial and commercial CTO. For over 20 years, Marcus has built a global reputation as a technology innovator. Today, he architects and delivers world-class products and projects that solve real business problems.