Between now and the end of the year, 75% of European employees will have undergone an evaluation interview. And yet, if there is one thing on which everyone can agree, management and staff alike, it is that these annual reviews are often painful, even useless. Why, then, do we repeat them year after year? Arguably out of habit, and not knowing what to replace them with. Meanwhile, however, General Electric, Accenture, Microsoft, and Deloitte have all found an effective alternative: creating a culture of constant feedback.
According to the firm Tower Watson, only 36% of European companies consider their current methods of performance management – based largely on annual appraisals– to be efficient. This low number is hardly surprising, however, given that, «In its current form, the lone annual interview, which focuses on past individual performance, fosters neither commitment or achievement, “ says Associate Director of Human Resources at Deloitte, Sami Rahal, who goes on to argue: “We must transform our evaluation of individual and collective performance in an innovative and pragmatic way. This transformation is the key to renewing the contract of mutual trust between employee and manager.» And it’s a key that can unlock the potential for increased agility in performance evaluation.
The many criticisms of the annual appraisal
Annual appraisals are often accused of adding little to no value, because they do not allow managers to take into account the actual performance of employees or to effectively support their development. These interviews tend to be:
• General: Too vague to draw any concrete conclusions. By alternating between positive and critical messaging, managers may think they are sparing their employees. Instead, staff often emerge from annual review meetings more confused than when they went in.
• Subjective: The manager struggles to accurately recall employees’ achievements over the past year, and there is a tendency to rely on recent impressions rather than facts.
• Demoralizing: Employees go into annual review meetings hoping for a promotion, while managers are focused on trying to maintain their bottom line. From these positions, neither party is able to really hear the other and everyone ultimately walks away frustrated.
• Inflammatory: With risk of conflict, defensive interviewers, and justifications and excuses thrown at any criticism, the year-end interview is the encounter that employees and managers fear most because it exacerbates tensions that may have accumulated over the year
• Time consuming: everyone spends a huge amount of time preparing for year-end interviews in spite of the fact that no one is able to prove that their impact on performance actually exists.
• Costly: A company with 10,000 employees will spend an average of 35 million dollars on these processes.
Replacing interviews with regular check-ins
Considering this general discontent, is the solution, plain and simple, to bring these interviews to an end? If so, what could possibly replace them? From General Electric and Accenture to Microsoft and Deloitte, all of the companies who have decided to get rid of annual interviews instead encourage regular sharing moments between employees and their managers.
To read the article in full:
Based on “The End of Annual Performance Reviews: Are the Alternatives Any Better?” (Knwoldege@Wharton, September 2016); “Entreprise : la mort programmée de l’entretien annuel” by Loïc Farge (RTL, December 2016) ; “General Electric signe la fin de l’évaluation annuelle des salariés” by Lucie Robequain (Les Echos, September 2016) ; “Why big business is falling out of love with the annual performance review” by Lillian Cunningham and Jena McGregor (The Washington Post, August 2015).
