Article 1 - Yealy / Annual Performance Reviews, and Modern Approaches

From the very beginning, yearly or annual performance reviews are considered as a prime and foremost tool to assess the performance of the employee. But it’s been questioned by many industries about productivity and effectiveness. Since this became the key topics in the major research and suggest that traditional performance approaches are not only ineffective but also negatively affect the employee motivation, productivity and performance of the employee. (Aguinis, 2019)

Annual Performance Review and the drawbacks

Delayed Feedback (Once in 12 Months)

Reviews feedback and ratings are given only once a year in the traditional review, most of the feedback is given so long after from the occurrence, which will restrict the opportunities to rectify and redesign the process and the approaches.

In contrast, research indicates that employees perform better when they receive immediate and ongoing feedback (London & Smither, 2002).

Employees require positive feedback to motivate and negative feedback to improve their skills and will frequently, once year review feedback lacking the interest on improvement areas.

 

Disengagement and Unmotivated

Traditional review, assessing the employee based on the misconduct and the mistakes in the past for rating rather than the areas of growth, which directly unmotivating and leading to disengagement.

Studies suggest that employees who receive infrequent evaluations may experience uncertainty regarding their performance, reducing motivation and workplace satisfaction (Cappelli & Tavis, 2016).

Favoritism and Subjectivity

Traditional review approaches are prone to favouritism and bias assessment, which leads to unfair assessment and reduce the trust and confidence in the approach. Negative impact of the recent event, (Halo Effect) one parameter to influence the overall assessment also highlighted (Buckingham & Goodall, 2015).

 

Rigid, One-Size-Fits-All Approach

Many performance appraisal systems follow standardized forms and ratings that do not consider individual roles, career aspirations, or learning styles (Pulakos et al., 2015).

Modern Approaches to Performance Management

Continuous Feedback and Coaching

Organizations are shifting towards frequent check-ins and real-time feedback rather than relying on annual reviews. Research indicates that continuous feedback leads to better employee engagement, higher job performance, and increased satisfaction (Adler et al., 2016).

Effective assessment approaches are

• Regular one-on-one meetings between employees and managers
• Real-time feedback through the performance management software and applications
• Motivating peer feedback to enrich the collaboration and improvement

Companies such as Google and Adobe have successfully implemented continuous feedback systems, leading to improved employee performance and engagement (Cappelli & Tavis, 2016).

 

360-Degree Feedback

360-degree feedback involves gathering insights from multiple sources, including peers, subordinates, and clients, rather than relying solely on managerial evaluations. This approach provides a more comprehensive assessment and reduces bias (Bracken et al., 2016).

Significant benefits of the approach are

• Equally paying the importance to the whole employee
• Willingness and engagement are high due to transparency and fairness
• Team collaboration and communication are enriched to the next level

 

Goal-Oriented Performance Management (OKRs and SMART Goals)

Many companies are adopting goal-setting frameworks such as Objectives and Key Results (OKRs) and SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals to track employee performance. Research suggests that well-defined goals improve motivation, accountability, and overall performance (Locke & Latham, 2002).

Organizations like LinkedIn and Microsoft use OKRs to align individual and organizational objectives, ensuring employees focus on meaningful outcomes rather than routine tasks (Doerr, 2018).

Emphasizing Employee Development Over Evaluation

A shift from evaluation to development helps employees grow professionally rather than simply being rated. Research supports the idea that coaching, mentorship, and career development discussions improve employee satisfaction and retention (Grant, 2017).

Essential approaches involve in

• Individualized development strategies
• Feedback focuses on improvement on strengths rather than shortfalls
• Create the opportunities to upskill and reskilling

Leveraging AI and Data Analytics for Performance Insights

Artificial intelligence (AI) and data analytics are transforming performance management by providing real-time insights and reducing bias (Chamorro-Premuzic et al., 2019).

There are many tech based companies developing AI powered performance management solutions to help organizations to monitor the progress continuously by identifying performance patterns, providing objective, data driven feedback and enhancing transparency and unbiased in evaluations.

Eg: Workday, Culture AMP

The Future of Performance Management

The transition from the traditional yearly assessment review to modern and optimal performance review system is vital for the continues feedback as well as employee personalized development. The outcome is proven, with the transformation in approaches leading to high employee engagement, improved performance and a friendly work culture with higher satisfaction.

So, let’s encourage empowering to glow and grow towards the success ladder rather than scrutinize once a year rating.

 

References

• Adler, S., Campion, M., Colquitt, A., Grubb, A., Murphy, K., Ollander-Krane, R., & Pulakos, E. (2016). Getting rid of performance ratings: Genius or folly? Industrial and Organizational Psychology, 9(2), 219-252.
• Aguinis, H. (2019). Performance management for dummies. Wiley.
• Bracken, D. W., Rose, D. S., & Church, A. H. (2016). The evolution and devolution of 360-degree feedback. Industrial and Organizational Psychology, 9(4), 761-794.
• Buckingham, M., & Goodall, A. (2015). Reinventing performance management. Harvard Business Review, 93(4), 40-50.
• Cappelli, P., & Tavis, A. (2016). The performance management revolution. Harvard Business Review, 94(10), 58-67.
• Chamorro-Premuzic, T., Winsborough, D., Sherman, R. A., & Hogan, R. (2019). The future of talent assessment. Harvard Business Review, 97(3), 86-95.
• Doerr, J. (2018). Measure what matters: How Google, Bono, and the Gates Foundation rock the world with OKRs. Penguin.
• Grant, A. M. (2017). The third ‘generation’ of workplace coaching: Creating a culture of quality conversations. Coaching: An International Journal of Theory, Research and Practice, 10(1), 37-53.
• Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation. American Psychologist, 57(9), 705-717.
• London, M., & Smither, J. W. (2002). Feedback orientation, feedback culture, and the longitudinal performance management process. Human Resource Management Review, 12(1), 81-100.
• Pulakos, E. D., Mueller-Hanson, R. A., & O’Leary, R. S. (2015). Performance management can be fixed: An on-the-job experiential learning approach for complex behavior change. Industrial and Organizational Psychology, 8(1), 51-76.