An Overdue Obituary for the Annual Performance Appraisal

By: Grant W. Levitan

The death of the annual performance appraisal has made headlines lately, and few of us lament its passing. Do any of us actually enjoy dealing in broad generalities about how things went last year and what percentage of our objectives we actually met, and then being stuck with a label for 12 months? Who can say that they found significant benefit in arguing with their boss about what really occurred in that meeting last February or March and who was really responsible for the outcome? Plus, when the annual performance appraisal is combined with the announcement of the annual bonus or raise, let’s face it, most of us are too busy thinking about the money to fully engage around the feedback.

Here are two fundamental reasons this annual ritual leaves much to be desired, for both the evaluator and “evaluatee”:

(1) Problems with Performance Appraisal

Providing feedback on an annual basis violates two very basic principles that underpin all human learning: immediacy and specificity. Regarding immediacy, there are reams of research proving the importance of providing feedback as soon as possible after an event. I know, you’re thinking that delayed gratification is one of the things that differentiates us from our four-legged friends. True, but even for our highly evolved brains, the sooner we receive feedback, the more powerful the impact. Specificity also potentiates feedback. When someone has just completed a complex series of managerial tasks, it’s one thing to say “good job.” It is something else to point out exactly which tasks were performed well and which ones could be improved upon. And after 12 months, it’s nearly impossible to gain agreement over things that happened back in Q1. Most importantly, feedback at that point represents nine months of lost opportunity to make mid-course corrections. 

(2) Relationship Context

Much of the "underperformance" of performance management is because it’s just really hard to do, even under the best of circumstances. We’ve all seen the manager who comes up with something negative to say—no matter how trivial—just because she thinks it is required in a review. It takes a lot of forethought and planning to provide both positive and negative feedback and to shape a meaningful development plan. Harder still is to take underperformers out of the company and to do it in a way that has integrity, because you took the hard road by giving feedback in the first place. How rare it is to be able to do this with dignity for all involved. Conducting meaningful performance conversations requires a relationship context. The foundations for this lie in managers truly understanding the whole person, what she wants out of life and career, and how the current job fits with this very personal vision.

The End of Annual Performance Appraisals?

Not surprisingly, organizations are chucking the annual appraisal in favor of monthly or weekly conversations about performance—and even weaving professional development into the conversation. Hey, who doesn't like to get regular feedback on whether they’re meeting objectives and how they can accelerate their career development? Who doesn't like the feeling that they're being looked after and supported in their development rather than just measured and evaluated? If you're lucky, you've had one or two managers who did this well, who really knew you, who shared your hopes and dreams.

But hold on, isn’t there such a thing as too much feedback, too often? Is a weekly meeting between you and your manager something that can quickly grow stale, not to mention eat up valuable time for both of you? Instead, perhaps monthly conversations present an opportunity to identify themes and trends emerging on both the performance and development sides. Opportunities for stretch assignments can be created on the fly rather than waiting for an annual or mid-year check-in. Objectives can be reset based on emerging opportunities and unforeseen circumstances. Yes, there is a lot to like about this new toy. But wait, there's more!

A New Nine Box

The traditional nine-box meeting evaluating “performance and potential” or “performance and values” is starting to give way to a different kind of conversation where managers answer new questions before promotions and pay raises are doled out:

  • Do you have the talent you need today? For later? How do you know?
  • Who is your go-to person?
  • Who would you most like to give more responsibility and compensation?
  • Who do you always want to be on your team?
  • When at first they don't know what to do, can they always figure it out?
  • Can they articulate how the work they're doing connects to greater outcomes and the broader strategy?
  • Are they a potential performance risk or at risk for harming their team or a customer?

What’s Next for Performance Appraisal: Practical Considerations

So, what next? The annual rating process is undergoing a major transformation; a hybrid is emerging that will incorporate in-the-moment feedback and immediate course corrections with an annual summation process that measures employee development and performance over time. (To wit, a recent Schumpeter column in The Economist points out the oddity in criticizing annual feedback for being too slow while also criticizing companies for being too short term.)

For those wanting to pursue such a hybrid model, here are a few ideas:

  • Pilot your process before going companywide, and expect to adjust it along the way.
  • Ensure managers know how to conduct a weekly or monthly conversation and help them get over their discomfort with understanding the whole person.
  • Consider the value in employees’ assessing their manager’s ability in developing them.
  • Experiment with web-based interactions vs. face to face.
  • Offer other rewards such as time off, sabbaticals, or opportunities to work with local charities as a loaned executive.
  • Dispense with ratings altogether.
  • Do away with strictly scheduled annual raises.

I am reminded of the old joke about three octogenarians walking home from a friend’s funeral and conversing about what they would like others to say about them when they are each laid out in their caskets. The first two hoped others would remark on what virtuous lives they had led. The third hoped people would say, “Look, he's still breathing!” And so it is with the annual appraisal; reports of its death may be somewhat exaggerated, but, take heart! It’s losing followers fast, and what remains will be informed by a richer, more timely, and more humanized process.



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