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Combatting Inefficient Annual Performance Appraisals

The first quarter is nearing a close and many have endured the annual performance appraisal. A staple of the corporate world, they are increasingly seen as inefficient and ineffective in evaluating employee performance. While many organizations are realizing that the traditional process doesn’t provide the necessary feedback and development opportunities for employees to improve and grow in their roles, they continue to do them year after year.

Here’s the truth – most people dread performance appraisals – employees and managers alike. In the past, I have been involved with organizations who saw fit to keep criticisms and praise ‘under wraps’ until this annual meeting. As a result, I felt blindsided by the criticisms, and barely remembered the situations I was being praised for. If you as a leader are still evaluating employee performance reviews via annual performance appraisals, you should reconsider. Here are the top 4 reasons they are considered inefficient and a poor choice for solely evaluating employee performance:

1. Limited Feedback Opportunities

Employees only receive feedback once a year, which means that any performance issues or areas for improvement may go unnoticed for long periods of time. This can lead to frustration for employees and managers alike, as well as a lack of progress in addressing performance issues.

2. Lack of Focus on Employee Development

Annual appraisals often focus solely on past performance, rather than providing employees with the guidance and resources they need to improve and grow in their roles. This can lead to a lack of motivation and engagement among employees, as well as a lack of progress in achieving organizational goals.

3. Limited Use of Data

Appraisals typically rely on subjective evaluations, rather than objective data, which can lead to inconsistencies in the evaluation process. This can also make it difficult for organizations to identify patterns and trends in employee performance. (As a research analyst, I recognized the impact)

4. Prone to Recency Bias

Recency bias occurs when recent events are given more weight than older events when evaluating performance. This can lead to an unfair evaluation of employees, as the events that are most fresh in the evaluator's mind are given disproportionate importance.

All of these inefficiencies combined contribute to the lack of an annual appraisal’s effectiveness and can lead to a less motivated, less engaged workforce and a lack of progress in achieving organizational goals.

So, what can you do about it? As a leader, it’s important to know how to provide effective feedback on a regular basis and coach to performance. It’s your responsibility and if you are not sure where to start, we can help. Our leadership training provides the tools and processes for effective leadership and your ability to coach and improve employee performance.

Here are a few ways to ensure you have a pulse on employee performance:

1. Foster trust and reduce drama with agreements

Performance management is a constant and unending learning system both for the employee to consistently improve in their position and for the manager to understand how to better coach their people. By managing mutual agreements, you’ll reduce miscommunication and drama. As one recent participant stated:

This ongoing coaching and managing to agreements also facilitate a growth mindset – the ability to know what is being measured and the expectations/goals in 6 areas: (Outcome, Activity, Process, Communication, Behavior and Values ) provides opportunities for coaching and open dialog throughout the year.

2. Make time for weekly 1-on-1s

Continuous performance management involves providing regular and frequent feedback to employees throughout the year. It’s important to schedule weekly one-on-one meetings and team meetings, whether in person or on an online platform, to understand any current challenges and provide guidance. Providing feedback and coaching on a regular basis, builds trust and increases communication, leading to better progress and development for all parties.

3. Provide On-the-spot coaching

An employee who is praised for their successes and coached on their failures in real-time makes for a more consistently successful and engaged employee. They can quickly correct a mistake, understand the cause, and take action to ensure it doesn’t happen in the future.

Retaining top talent is a high priority according to recent reports. Whether a seasoned manager, newly promoted, or working toward the opportunity, Butler Street’s Leadership Effectiveness can help you become a leader people want to follow. No more avoiding difficult conversations. Improve performance by learning to manage to agreements, recognize behavior styles, and effectively coach employees with both positive and constructive feedback throughout the year to unlock their full potential. Offered as a self-paced, comprehensive online learning program, a weekly, virtual instructor-led program, and 1 or 2-day onsite training. Contact us to learn more.


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