From Dread to Delight: Reinventing the Annual Performance Review

Every year, managers and employees come together to perform what many consider one of the most awkward and even dreaded obligations: the annual performance review. Why? According to SHRM, 66% of employees say the performance review process interferes with their productivity, and 65% say it isn’t even relevant to their jobs. Ninety-five percent of managers say they aren’t satisfied with their organizations’ performance management processes either, while 90% of HR professionals don’t believe their companies’ performance reviews provide accurate information.

However, there are ways HR leaders and managers can improve this process, transforming these reviews into a positive aspect of the employee experience. On Talent Experience Live, we covered the biggest taboos surrounding the process — and what can be done to make it better.

You don’t want to miss this personal take on the most controversial aspects of the annual performance review, so read on for highlights or catch the entire episode below.

Why do employees dread performance reviews?

“It doesn’t matter how great someone is performing. There’s still some level of anxiety going into a review,” JD, Vice President of Marketing at Phenom, noted. This can create a closed mindset that prevents employees from fully absorbing valuable feedback. For example, rather than benefiting from constructive criticism of the way they handled a project, they may perceive it as a tactic to withhold a promotion or pay raise.

“[Employees need to] come into the annual review process … in a very healthy mindset. You need to be very open to learning and understanding and hearing that feedback,” JD said.

This inherent anxiety is partially because these meetings are typically transactional in nature, and managers can help change that.

According to JD, managers should focus on developing individual relationships with their reports characterized by frequent one-on-ones and consistent feedback. “That really is the true reinvention.” When a trusting relationship is established, discussions about challenges and needed improvements really start to resonate.

Do employees need a “champion” who isn’t their manager?

Performance reviews are one way to help employees forge a career path. JD believes that it’s just as important for employees to find a champion — a more experienced colleague who knows the employee’s strengths and will advocate for them to help them meet career goals.

A champion isn’t always the employee’s manager. “If you are working on your career path and you want the best from yourself, your fastest growth… you need to make sure that you’re working very closely with your champion … who knows your ability and potential and is looking out for your growth at work.”

Your champion isn’t your BFF, either. A champion has to be someone who will provide honest guidance — which might be critical at times.

What’s the most effective timing for a performance review to take place?

Should a performance review take place annually? Quarterly? Outside of the review, how often should employees receive feedback?

Although a stand-alone annual performance review isn’t enough, it’s still necessary to have at least one formal meeting to reset and reflect on accomplishments and goals. And early in the year, when people are geared toward fresh starts, makes the most sense. This gives employees time to immediately start putting feedback into action and get working on goals while it’s fresh in their minds.

In between those annual resets, consistent one-on-ones to provide ongoing feedback are critical. It’s especially important to address problems and challenges as they arise rather than wait a whole year to bring them up.

Just make sure “it’s consistent, and there’s that open opportunity for the employee to voice challenges, concerns, and open discussions around career paths,” JD said.

JD and host Devin Foster further shared their opinions on employee performance reviews in the form of six “hot takes.” Let’s dive into them below.

Hot Take #1: Should annual reviews include a salary discussion?

While salary is absolutely tied to annual performance, “they should be two different conversations,” JD said. Some companies structure their annual reviews to include salary discussions. If allowed, however, consider a separate meeting dedicated to salary. Here’s why:

• Salary discussions tend to dominate a review, eclipsing the importance of recapping accomplishments and exploring needed improvements.

• The taboo topic of salary can add anxiety to an already nerve-wracking situation.

Hot Take #2: Should salary discussions happen throughout the year?

Managers should work to normalize salary conversations with employees — as long as employees understand that the outcome may not always be in their favor. But, open communication regarding salary can help employees understand how to get closer to their desired compensation.

“Employees and managers should be able to revisit salary multiple times, especially if there’s a disconnect between what the employee feels and where the manager is,” JD said.

Hot Take #3: Should there be a performance review for the performance review?

There could be value in conducting a recap of the performance review a few days after the fact, when everyone has had time to reflect. It’s a good way to clarify outcomes and goals.

But is there a need to schedule a formal follow-up session? Not if managers are already meeting individually with employees on a consistent basis, JD believes. “This should be part of your general discussions and one-on-ones.”

Hot Take #4: Should employees provide feedback on the manager’s performance?

Direct reports are in a unique position to give managers feedback on how they’re doing at, well, managing people. JD added that managers should take it upon themselves to ask for feedback. “Managers should openly ask, is there anything you’d like to share with me on how I can improve as your manager?”

A couple of caveats here:

• Don’t let this bogart too much time from the employee review

• Make sure employees understand that their input, while always considered, may not always be acted upon

Hot Take #5: What are managers looking for in a performance review?

Whether the employee is an all-star or more of an average performer, JD appreciates people who come to a review grounded in reality regarding accomplishments and needed improvements.

“As a true leader, I’m really looking for accurate reflection … did they come to the review with an accurate reflection of their performance and behaviors over the last 12 months?”

Hot Take #6: How should managers balance positive and negative feedback?

While constructive criticism is important for employees to improve and grow, too much can have the opposite effect. In the face of constant negative feedback, people can shut down or overthink, which is why positivity is key in assuring employees that things are heading in the right direction.

On the other hand, JD is motivated by negative feedback and is more likely to turn to data analytics or simply to read the energy of his team to measure how he’s doing.

Managers need to understand that employees have their own individual calibration regarding positive and negative feedback. “As managers and leaders, we need to really understand our folks and who needs what, and we need to carve out that time to make sure it’s happening,” JD said.

Break it down for us: what gives performance reviews their bad rep?

Just to recap, here’s why the typical annual performance review is nobody’s favorite:

• It goes hand-in-hand with stress and anxiety

• It’s usually transactional rather than relational in nature

• Instead of saving it all up for one big yearly stress-fest, managers should be having one-on-ones with direct reports on a consistent basis

• Annual reviews alone are not enough to help elevate employees’ careers. They need to forge connections and have clear career pathing opportunities

What’s the most essential way managers can turn dread into delight?

The bottom line on elevating performance reviews? Get consistent about one-on-ones with employees. “Try to have a more relaxed relationship versus thinking every review, every one-on-one, is this transactional thing that just goes back and forth,” JD concluded. “Transactional discussions don’t build trust and confidence and security — and you need that security to have the hardest discussions.”

Go deeper into creating a positive employee experience: read our definitive guide.

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