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Globe and Mail: Why and how to overhaul the annual performance review

This article was originally published in the Globe and Mail

It’s no secret that the annual review stirs anxiety among employees as well as their managers, who usually dread its tediousness and potential for confrontation. Yet despite being widely documented as ineffective and demotivating, the annual review remains a continued practice with changes over the years made only to the format and tone.

What it really needs is an actual overhaul.

Today’s reality is that, for the first time in history, any given company may have multiple generations working alongside each other, with millennials influencing as much change on policy and procedures as their boomer predecessors did.

These differences bring their own challenges, especially when older workers may find themselves reporting to someone younger. In addition, the increased pace of modern business has led to new and rapidly changing roles, making the traditional annual review an antiquated exercise, at best.

While a formal, on-the-record summary of performance is still necessary, the annual review should be just a step in a continual process of performance management throughout the year. Employers must shift their mindset as to the performance review’s function and value for the employee, while balancing the individual needs of each generation in the workplace when it comes to the following three points:

CADENCE OF CHECK-INS

Thanks to the digital age we have all come to expect instant responses. And having grown up in an era of “instant gratification” from social media, instant messaging and text, millennials and their younger counterparts are especially more likely than older workers to require constant feedback and more frequent check-ins.

This is actually a good thing.

While managers have long been encouraged to provide regular feedback and periodic check-ins, what actually makes feedback meaningful is when it’s given in a timely manner. Employees benefit more from in-the-moment praise for a successful achievement, while immediate coaching for a “teachable moment” provides a stronger learning opportunity, regardless of age.

A more formal structure may include a weekly or monthly meeting with each employee to discuss their progress, performance and their developmental needs. Other programs may be less formal but, in all cases, they should keep to the spirit of frequent and regular “coaching” rather than evaluating, with the focus being on the employee and what they need to succeed.

HOW YOU COMMUNICATE

While all generations value communication, each has a different opinion on what is the best way to communicate. For example, older employees tend to prefer face-to-face interaction while young people tend to favour digital communication.

Generally speaking, preferences should be taken into consideration, but when it comes to performance-related communication, this is still best done face-to-face (or video conference calls for remote workers).

Most employees appreciate a tangible expression of their worth to the company, demonstrated by your time and full attention. This also helps provide more certainty that feedback was clearly received through body language and other visual cues that could provide useful positive – or even negative – insight.

That said, feedback should never flow in one direction only. Managers need to build trust with two-way dialogue that encourages the exchange of candid feedback, so employees feel comfortable sharing ideas. Save the digital communication for sending out timely meeting summaries and confirmation of next steps.

CATERING THE CONTENT

Just because something was always done a certain way doesn’t mean that’s how it has to be done now. There’s a new kid on the block, literally. Compared with older generations, who were more concerned with tenure and loyalty, millennials are more likely to change employers often and therefore will want specific feedback that relates to their career progression.

So, while “how you can help the company” may resonate with older workers, it means little to the younger ones. In this case, think about how you can shift the conversation to opportunities for growth and development and demonstrate how they can achieve their career objectives. Be clear on the competencies required for success and be prepared to discuss how you can help them further develop them.

Working together to set goals that actually have meaning to the employee, as well as the business, will help with motivation, engagement and retention, while encouraging ownership of their own development. Hence, some companies are shifting to a more supportive system of frequent coaching that focuses on the future, rather than dwelling on the past.

While a mechanism for providing feedback and supporting the merits of a raise, promotion or even termination are still necessary, to think that the annual review and one style of process works across the board just doesn’t make sense. Instead, design for a more flexible performance system that can be tweaked, and that provides frequent and better opportunities to engage and grow employees in an efficient and meaningful way.