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10 Reasons to Scrap Year-End Performance Reviews

10 Reasons to Scrap Year-End Performance Reviews
Image credit: itbdigital.com

It's the time of year when companies are holding their annual reviews, taking employees one by one into the conference room to evaluate their performances. But is this time-honored activity still relevant today?

"Many cultural practices stay around beyond their useful life, and annual reviews are one of them," says David Hassell, CEO of 15Five, a San Francisco-based software company.

Instead, Hassell says entrepreneurs should replace annual reviews with weekly check-ins: "Communication today is instantaneous and people expect a quick response," he says. "To wait until the end of the year to provide employees with helpful feedback is just too long."

While compensation reviews can be held annually, entrepreneurs would benefit from weekly performance evaluations. If you're not sure they're for you, Hassell offers five reasons why annual reviews are outdated:

1. They aren't mutual. Annual reviews are usually a one-way street, with the business owner giving the employee feedback. Weekly reviews, however, offer employees an opportunity to share their feelings.

Related: Not All Employees Deserve a Bonus

Hassell suggests asking employees these four questions each week: What are your successes and what's going well? What challenges are you facing, and where do you need help? Do you have any new ideas that could improve your job and/or the company? How are you feeling and what is the morale around you?

The answers should take 15 minutes to prepare and five minutes to read. Employers can use the answers to provide quick feedback and engage with their employees. Hassell's company, 15Five, offers software that helps small-business owners check in with their employees, or you could do this in person or via email.

2. They don't measure the heartbeat of company. When you review your employees once a year, you get one touch point, says Hassell. Weekly check-ins provide 50 touch points.

"Annual reviews feel burdensome to those who must prepare them," he says. "Weekly check-ins are moving, lightweight and agile."

Related: Employees Driving You Nuts? It Might Be You, Not Them.

3. They're not in real time. Unless your business requires months of ramp-up time before a product launch, you probably work in real time. Products and services launch quickly, and customer engagement happens on a daily basis through social media. Employee feedback should be in real time, too.

"When you offer quick feedback you offer the ability for quick correction and learning," says Hassell. "You also have a chance to give quick praise - employees want to know they're valued."

4. They can be nearsighted. Unless an employee's performance is well documented throughout the year, annual reviews are often a review of the past two or three months.

"An employee may have had a recent personal challenge that affected their performance but didn't give a full picture of their work ethic," says Hassell. "Weekly reviews provide a more objective sense of an employee's status."

5. They may come too late. Millennials average a year and a half to two years on the job, says Hassell, which means annual reviews would provide them with just one or two chances for evaluation.

"Feedback is helpful from an employee standpoint," he says. "If it's done more frequently, it may even give employees a reason to stay on the job longer."  

Related: How to Make a Poor Performance Review More Effective

Stephanie Vozza is a freelance writer who has written about business, real estate and lifestyle for more than 20 years.

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