An illustration of a man in a suit looming over a much smaller person and peering at them through a microscope. There are graphs and stars around the smaller person to symbolise a performance review.
Image: © Nuthawut/

Is your employee review system out of date?

21 Jun 2023

Adam Coleman, CEO of HR software solutions provider HRLocker, advises employers to ditch the annual performance review process in favour of regular feedback.

It’s a tough time for employees. Inflation is rocketing, wages are stagnant and every penny is spoken for. Employment insecurity is rife, and workers are worrying they’ll be in the next round of layoffs. The last thing they want is to sit down and do a lengthy annual performance review. Let’s be honest. Who can blame them?

Few institutional practices are as old or hated as the traditional annual appraisal. Although the evaluation of workplace performance dates back to ancient China, it was during the industrial revolution that it became serious business. In the early 1900s, the American preoccupation with ability testing and quotients cemented performance reviews in the HR function and broader organisational operations. This primarily merit-based rating system developed by the military still influences the process many organisations use today. Yet the world has changed so much.

Humans have marched across the moon, invented the world wide web, created driverless cars, and given jobs to robots. It’s a totally different world of work too. Workplaces are dynamic. They’re flexible, hybrid, remote, and even nomadic. Practices and priorities are in a constant state of flux. Face it, reviewing people annually is all but redundant.

If your organisation is holding onto the annual performance review process, ask yourself – is it still working? Is it helping you and your people act on business goals? Does it fuel your productivity and competitiveness in these challenging times? Or, is it just a broken system you haven’t made time to fix?

The problem with annual reviews

Annual performance reviews are, in theory, an excellent idea. They’re a way for leaders to assess employee contributions to the business and provide actionable feedback to help improve performance.

They are supposed to provide dedicated time for you to sit your people down and ask them questions about their work, role and experiences, and give you a chance to provide constructive criticism and praise their best efforts. It sounds like a worthy investment, right?

What happens in a performance appraisal isn’t necessarily the problem. It’s how those appraisals happen, why they happen, and when they happen that’s causing friction. For starters, once a year simply isn’t enough.

If we apply the annual performance review to the start-up world – where most start-ups fail within a year – employees wouldn’t get a single performance review. And as more businesses make use of freelance and contract talent during tough times, teams are changing shape at a rapid pace. Organisations are more project-orientated, as traditional business departments cross-pollinate and collaborate. What would happen in these instances if you waited a whole year to receive structured feedback and give career guidance?

The world of work moves much faster now; new technology inspires new systems and processes regularly, with software updates forcing real-world updates in the workplace. So, it’s no surprise that more than a third of workers want regular feedback from their boss.

The bottom line is that a review system is a must-have. It keeps people accountable and reminds us of how far we’ve come, which is incredible for morale. But the current format has to change.

Continuous feedback is a ‘no-brainer’

According to research from Gallup, when managers provide weekly feedback, team members are more than twice as likely to be engaged at work. Reviewing more frequently is, then, a no-brainer.

That doesn’t mean you have to replicate the annual review every week or month – it wouldn’t be the best use of your or your employees’ time anyway.

Instead, focus on creating systems where feedback is delivered continually, whether it’s adding a feedback stage to your projects, earmarking time in your monthly meetings to talk about progress, or another system that works for you.

This feedback should be focused on individual goals and projects, so your team can take an iterative approach to work and make little improvements at regular intervals.

Asking better questions

It’s also time to question the content of performance reviews. All organisations should be using this time to address the things that matter most to their people, as well as to their business. For example, are your employees at risk of burnout? Are they spending enough time with family and friends without work taking over? Are they healthy, mentally and physically? Do they find their work fulfilling?

As remote work becomes mainstream, use the time in your performance reviews to focus on work style and environment. Whether in a full-time office team, hybrid gang, or distributed team of digital nomads, we can all benefit from better understanding our colleagues’ work styles.

Make the review meaningful

The most important thing to determine is whether your set-up is conducive to your employees’ and your business’ success. If it isn’t – and it’s within your power to change things – make sure you offer your people an alternative way of working.

If you can’t offer your people more money to help them weather the cost-of-living storm, at least look at ways you can make the time they spend working more enjoyable. A core-hours policy shows empathy towards the unique lifestyles of your employees, even if it isn’t a full-blown remote-work policy.

Regular check-ins also throw open the potential of adapting workflows. Our recent survey revealed workers want to be able to use tech-powered tools and solutions. One in three believe employers should invest in AI to automate tedious tasks, for example.

Empowering people to embrace new tools and creating meaningful work opportunities through technology means your people can focus on more purposeful work. But you won’t know this if you’re not asking questions or providing opportunities for them to tell you what they want.

With a regular feedback loop in place, your performance reviews can become much more than a tick-the-box exercise. They can become a chance to talk about the things that inspire your people, the future of the business and their role within it, and all the things they can look forward to in the year ahead.

They might even be the key to retaining talent, staying competitive and achieving critical business objectives. Who wouldn’t want that?

By Adam Coleman

Adam Coleman is the CEO of HR software solutions provider HRLocker. Before setting up HRLocker, he held senior HR positions in O2 UK and O2 Ireland and was head of HR for Esat Digifone.

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