Employers ditching annual reviews for more frequent feedback

There seems to be a shift in the way employers evaluate workers. A number of large
companies (for example, Microsoft, Dell, and Gap) have recently nixed annual review
systems in favor of more frequent forms of feedback on employees’ performance.

The shift seems like a win-win. Giving employees more timely feedback on their work
product means they have the opportunity to change course before small issues become big
ones. For employers, there is the benefit of time. Completing formal annual reviews can be a
tedious process for supervisors and HR, especially in traditional work environments like large
law firms. The idea of scrapping the time-consuming process for periodic check-ins with
employees is understandably tempting.

The good

The benefits don’t stop with saving time. For employees, more frequent evaluations can
demystify the process, open channels of communication, and help them be more
comfortable following up with supervisors as questions, concerns, and issues come up
throughout the year. Also, there is comfort in knowing where you stand, and regular
feedback likely will give employees more comfort.

For employers looking for ways to retain their minority workforce and create an
environment with greater equality, straying from the annual review process may be a great
place to start. Major publications like Fortune, The Wall Street Journal, and The New Yorker,
among others, have reported on how bias plays into employee evaluations, particularly when
it comes to gender. Studies show that bias rears its ugly head the most in the scoring format
in traditional annual reviews. Bias is much less glaring in reviews that involve narrative-type
feedback. Because more frequent reviews often lead to a more informal and conversational
format, they may serve to minimize implicit—and therefore hard-to- root-out—biases that
plague employers.

The bad

So what are the downsides? For employees, the drawback may be that more frequent
reviews can lead to pressure to produce tangible results constantly, which can lead to
anxiety. Employees don’t want to be without a good answer to a question about what they’ve
been able to accomplish since their last review, but if their last review was only a few months
ago, it may be hard for them to make significant strides. Strolling into a review with a year’s
worth of completed projects, acquired clients, and concrete results under your arm can make
anyone look pretty good. And that can translate into a more justifiable request for a merit
increase or bonus.

An annual review setup also allows for the normal ebbs and flows of business to level
out. A whole year’s perspective on an employee’s progress can buff out any rough spots that
would be much more of a focus in a review covering a shorter period of time.
From the employer’s perspective, the structure of annual reviews allows them to draw a
hard line on performance expectations. If an employee has a whole year to achieve an
objective, it’s much harder to make excuses if it doesn’t happen. When done properly, formal
annual reviews and their accompanying paper trails form a clear basis for personnel
decisions, regardless of whether they involve promotions or discipline. A lot more effort is
required to ensure that periodic reviews involve the same level of documentation.

The middle ground

As is the case with so many decisions employers have to make, a compromise is
probably the best bet here. Implementing a balanced approach that includes the benefits of
both formats may be the best way to maximize your employee evaluation system. What that means depends on your business needs. One option is a quarterly system in which the
yearly evaluation is formal and includes a compensation review and other evaluations serve
as regular check-ins on performance and objectives.