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What Will Replace the Annual Performance Review?

Written by Forum Corporation and posted by John Duncan on September 23rd, 2016.      13 comments

09

Annual reviews are going the way of the dinosaur. Companies of all sizes and industries are doing away with annual performance reviews because they no longer find them effective.

Unlike the dinosaur, reviews won’t be destroyed by one big event. They face two – demographic changes and disruptive information technology. Younger workers have little desire for the slow pace of annual reviews. The constant stream of information and shifting priorities make annual goals less relevant before the quarter is even up.

What performance management tools and methods can companies implement to keep objectives in line and keep employees executing a strategy in real time?

First, the annual performance review still has a place in the workplace. It just needs to be re-positioned and supported by other, more frequent, management activities. Annual goals have value because they align individuals with a larger department and company strategy. It’s a good connection to a larger business unit and keeps everyone going in the same general direction. It’s the frequency that’s the problem. Measuring and reviewing performance annually is outdated.

Managers need to check in to prevent checking out. Touching base with direct reports weekly is fine. But, a critical element of those conversations is knowing the importance of weekly and monthly performance to annual goals, and then appropriately tying those conversations back to those goals. Managers can keep the direction in mind, and measure the progress in that direction weekly.

Finally, and perhaps most importantly, performance feedback is best when it happens in real time. Managers do not need to see coaching as one part of their job. They need to completely redefine themselves as coaches. Coaches coach players throughout the game, in real time. They make corrections; offer feedback and encouragement in in the moment things are happening. Performance management is ongoing, not annual.

Younger workers, in general, are more accustomed to and in need of more frequent feedback. Managers who want to lead millennials and Gen Z workers need to see the annual review as a one-time level set, and then coach workers weekly, daily and in real time toward the direction set by the review.
 

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