Consider alternatives to your formal annual review process
by Kate Bischoff, Esq., Gray Plant Mooty, Minneapolis
Nobody loves the formal performance review process. Managers grumble about completing the forms, employees get nervous and the paper and deadlines can push the most patient HR professional over the edge.
Many companies—including Adobe and Netflix—have abandoned formal annual reviews, adopting a more agile approach that focuses on continuous performance management. Could this process work for you?
Performance management is key
Most people agree that performance management is key to having high-performing employees and business success. Managers set expectations, give guidance, measure performance in a written review and set future expectations. The rationale is that employees do better when they know how they will be evaluated and what’s expected of them.
Plus, documenting expectations and offering performance feedback can prevent legal claims or at least better position an employer to defend a claim.
Nothing about any of this is wrong. It’s the formal execution of an annual review process that can make people groan.
In theory, a review provides accurate, honest feedback and documentation of how an employee performed against expectations. The performance review often contains a ranking system to rate an employee against expectations and a narrative section that encourages the manager to elaborate. All too often, however, managers may sugarcoat ratings or comments and use vague language that is not helpful feedback and doesn’t result in good, accurate performance documentation.
As a result, employment lawyers have a love/hate relationship with the formal performance review. We love it when a review is done well and provides good evidence of an employee’s poor performance, supporting any negative decision made by the company. We hate it when a review is poorly done, because it is a challenge to fight against an employer’s own document in court and it less likely a jury will side with the company.
The lesson: If you do formal performance reviews, commit to doing them well. If you can’t get this commitment from managers, you might consider going another way.
If the formal review process doesn’t work for your company, there are other ways to accomplish the same goals. Performance management can be a continuous process, rather than an annual endeavor. As with the annual review, though, this process will only work if managers are accurate and timely in their feedback and document it.
Regardless of whether you use an annual review or adopt a continuous feedback model, here are the bare essentials for any successful performance management model:
- Get everyone on the same page and committed. Performance management is not just for HR. It is a companywide function, so everyone should be involved—managers, employees and HR. When planning your system, everyone needs to answer the following questions: How often do we expect managers and employees to discuss performance? Can we make that happen? How do we ensure it does happen? How will we ensure the feedback is timely and documented?
- Talk about expectations. Whether it is during onboarding, a team meeting, or a one-on-one, managers need to explain and document the expectations (i.e., “Here’s what we expect …” “Here’s how it’s done …”) Establish, talk about and document expectations so employees know where they stand and how they are measured.
- Give timely and regular feedback. More feedback is better, whether done formally or informally. Managers should be trained to regularly share both the good stuff and the not-so-good stuff as an ongoing part of their job.
- Document, document, document. Documentation is important, both so employees have clear feedback that can help them be successful and for legal reasons. While lawyers often prefer more formal documentation, companies don’t have to use a “one size fits all” approach. Managers see good and bad performance almost daily and can make note—formally, in an email to themselves, in a calendar with notes, through audio notes on a digital recorder, in a journal, or whatever other way works. When a manager has a discussion with an employee, they should keep a note of that, too. To defend employment claims, lawyers want good documents, a timeline, a record of any poor performance, but that documentation does not have to be a formal annual performance review.
Ultimately, a formal annual performance review has little value when it’s the only time employees hear about performance. Employers need to commit to giving honest, documented feedback in any annual review—if your company uses that approach—but at other times, too. Managers should remember that performance management is not only an annual exercise, it’s a regular, ongoing activity that can be agile and come in many forms.
Kate Bischoff is an attorney at Gray Plant Mooty, specializing in HR issues. Contact her at (612) 632-3000 or firstname.lastname@example.org.