For decades, the annual performance review has been the de facto mode of appraising employee performance and establishing guidelines for moving to the next level. But the process isn’t exactly revered. Lydia Dishman put it perfectly in a recent Fast Company article, “’Yay, it’s time for my annual performance review!’ said no worker ever.”
Dishman’s piece traced the history of the performance review, pointing to the two World Wars as a pivotal milestone when the military began relying on metrics to both identify poor performers and single out soldiers with leadership potential. As the years progressed, the business world followed suit and began implementing developmental feedback to help employees strengthen areas of weakness and move up the corporate ladder.
However, the process quickly became unwieldy. According to a 2015 Harvard Business Review report, Deloitte managers spent 1.8 million hours across the firm preparing and administering individual performance reviews. This resource burden has caused some companies to scrap performance reviews entirely, including Adobe for example.
But many organizations continue to follow the annual review cycle, begging the question: Are they using the right metrics to motivate employees?
Of course, the nature of what employee performance metrics might be varies significantly by industry, function, experience level, etc. But one thing that remains consistent is the importance of open, honest communication, particularly between managers and their direct reports. As a recent Forbes article put it, “…encouraging consistent, authentic communication establishes positive feedback loops” and these give employees “a healthy opportunity to work toward better behaviors.”
While there is no replacing the importance of human interaction, many companies are turning to technology to help engender a more transparent workforce. For example, Amazon has a program called Connections that collects daily feedback from employees on work-related questions ranging from the length of meetings to manager interactions to the frequency of positive feedback. In interviews about the program, some Amazon employees and managers anonymously expressed skepticism about its ultimate usefulness, but it’s an interesting use case for alternative workforce motivation strategies.
However, it’s important that companies not become overly reliant on technology for their workforce management initiatives. Amazon’s HR program was in the news again recently, this time for a secret AI recruiting tool that was unintentionally biased against women. The company disbanded the program when the bias was uncovered, but it serves as a cautionary tale on the need to strike the right balance between technology and human interaction.
When it comes to setting metrics for your team, human interaction is particularly important. If managers and employees communicate frequently, identify and discuss near-term goals throughout the year, and collaborate on any challenges that arise in meeting these objectives, the dreaded annual performance review will be much less burdensome — and much more valuable.