How to Modernize Your Annual Review

Make things better for both you and your employees.

By Julie Rieken, CEO*

The annual performance review. Paper based, once a year, rating scales . . . really?

You may be hearing about big-name companies ditching the annual review. But are they?

No! That’s because:

• Employees still expect, and often request, an annual review.
• Managers still need to justify employee-related decisions.
• Great employees (95 percent of them) want their greatness documented. Really.
• Compliance is critical.

Annual reviews make the news because some approaches aren’t working, and you may have even experienced failed approaches yourself. Need examples?

• Reviews that happen inconsistently—or not at all
• Reviews that focus on all the wrong, and not enough of the good
• Review forms that don’t align with an organization’s priorities

Instead, many companies are modernizing their approach to the annual review, and you can, too. Need some fresh ideas?

1. Go online. Putting the annual performance review online saves time and keeps your office on track, every quarter, semi-annually, or annually as you see fit. And there are other benefits. Imagine being able to spot trends over time with data that makes sense.

2. Utilize note-taking features. Ever do a review and struggle to remember beyond the last two months? Need documentation that you had a performance-related conversation? Want to be fair in your assessment? You’re not alone. Going online provides a single place for performance communication over time, informing the employee and supervisor’s perspective.

3. Align your forms with your values. It may seem obvious, but a surprising number of reviews collect data on competencies that do not align with an organization’s mission. Gather a team and together make a list of the things you want to measure in employee performance. Then shorten the list (it will inevitably be too long). Then shorten it again. It won’t be easy. At our company, we have two competencies. That’s right, just two. A famous person once said, “I’d have written you a shorter letter but I didn’t have time.”

4. Involve employees with self-reviews. Participating in a self-review is empowering for employees. It also helps employees internalize the expectations of the job. But most importantly, self-reviews help managers to understand an employee’s perspective. Imagine starting a performance conversation with, “I loved the way you reflected on the last year. Let’s start with how you felt you did on Goal ABC . . . ” rather than starting with, “I rated you this way on Goal ABC because . . . ” The first conversation is natural! Self-reviews can provide a refreshing change of perspective in performance meetings and can lead to more meaningful conversations.

5. Eliminate the final “score.” Frequently, annual reviews assign a numeric score to an employee’s performance. Have you ever tried to select a certain rating in order to reach a perceived number, or rated someone higher/lower in order to line up with the scores of peers? Instead, why not hide the scores? You might find yourself providing more honest responses, instead of scoring a review while trying to achieve a numeric outcome.

6. Change your rating scale. It’s true that “Meets Expectations” can feel so . . . mediocre. Your rating scale should have words that match your culture. Our favorite rating scale matches the stock market: Not Performing, Underperforming, Performing, Leading, Outperforming.

7. Ask better questions. Remember these? “List your strengths and weaknesses.” Instead, how about these? What went well? What could have gone better? What projects did you accomplish this year? What are you most proud of? Ask better questions and you’ll get truly useful feedback.

8. Focus on goals, not competencies. (Competencies are things like Work Quality, Communication, Teamwork, etc.) By focusing on goals, you can change the nature of the annual review. Goals are often individualized and specific to the employee’s areas of focus. Goals provide meaningful direction to employees and reduce ambiguity on what needs to be accomplished.

9. Shorten your forms. It might surprise you how long some annual review forms can be. We’ve seen forms with 60 competencies—because all of the competencies seemed good at the time. Long forms are difficult for the manager, often redundant, and employees feel picked on. We recommend using three to five competencies that align with your core values. Keep it short, and save room for goals and questions.

10. Consider 360 feedback (confidential, anonymous feedback from the people who work around them). Do you have highly flexible teams, or managers who have too many direct reports? In certain situations, employees work across multiple teams in the course of a year. Or managers have so many direct reports they can’t possibly know enough about some team members to conduct a review without the input of others. In these cases, 360 feedback might be worth considering.

11. Use the review to focus forward. Use the annual review to focus attention on what needs to happen in the future, not what happened in the past.

12. Be clear about performance levels. Each manager will approach performance in a different way. We call these tendencies “happy raters, sad raters.” The clearer you can be about what constitutes a certain rating, the more fair your annual reviews will be.

13. Annual reviews play an important role in every organization. From aligning expectations, to recognizing an employee’s accomplishments in writing, to justifying employment-related decisions, the annual performance review can help. It’s important to remember that just like other processes in your organization, it’s possible to improve the annual review. Even small tweaks can produce great results.

Julie Rieken is CEO of Trakstar and Reviewsnap, two companies that specialize in performance management. Julie sees industry-changing performance trends each day, from the traditional to the creative, and loves the approach some companies have been taking to modernize the annual review. She can be reached at julie@trakstar.com.