Many companies have recognized the need to transform the performance review process. One of the most important questions that leaders need to consider is “How often should performance appraisals be done?”
The classic model is to conduct reviews at the end of the year(annual review), when employees’ performance over the previous 12 months informs raises and promotions for the year ahead. But there are a few key problems with the annual review process.
The first is a tendency toward recency bias. An entire year is a long time to recall specific details and incidents, so managers tend to focus their appraisal only on the past few months—which doesn’t take into account an employee’s growth and development through the first three-quarters of the year.
Another problem with assessing an entire year of work is that managers often feel too much time has passed to discuss certain situations or teaching moments. The Growth Divide survey from Wakefield Research found that 67% of executives say they have removed negative feedback from an evaluation because a situation happened too long ago for the feedback to be relevant.
A lack of feedback throughout the year leaves many employees feeling anxious when annual review time rolls around. One survey of Millennial employees found that 62% have felt “blindsided” by a review. A major reason being that 3 out of 4 respondents said they feel “in the dark” about how their manager and peers assess their performance.
Partially due to this anxiety, annual reviews tend to be ineffective in helping employees develop professionally. The natural instinct is to become defensive, rather than receptive to feedback. And it becomes much harder for managers to coach effectively when they’re citing an event that happened 6+ months ago.
So, what’s the ideal timeframe for conducting reviews?
Honestly, it depends on the size, needs, and resources of your company. A few important questions to consider: How often will compensation be discussed? How much time does it take managers to fill out evaluations? What tools would make it easier/quicker for managers to complete reviews? How long does it take employees to exhibit signs of growth/change?
That being said, the Growth Divide survey found that, while nearly half (46%) of companies still conduct annual reviews, 81% of employees said they would prefer at least quarterly reviews. And 51% said they would like to have performance check-ins at least once per month. So, if your company switched to monthly or quarterly reviews, data shows that the majority of employees would welcome the change.
Whether you do performance reviews every 3, 6, or 12 months, we recommend that managers engage in regular weekly or monthly check-ins with their reports. After all, 85% of respondents in the Millennial survey said they would feel more confident if they could have more frequent conversations with their managers. These conversations should be focused on feedback and coaching, helping employees grow while providing a clear picture of where they stand and where they can improve.
Source: Human Resource Today