Do annual Performance Reviews reduce Workplace morale?

As companies begin to better understand the value of employee engagement and job satisfaction, a good amount of research is being done to uncover the secrets of effective employee-manager relationships. Much of this research has focused on the subject of employee evaluation and review. Recently, FindMyShift, a company that specializes in helping companies manage large numbers of employees, published an infographic presenting data on annual reviews specifically. There seems to be no doubt that this time-honored practice is coming up wanting.

According to the Society for Human Resource Management, 90% of employees find scheduled performance reviews not just ineffective, but painful. What’s more, the Psychological Bulletin reports that these reviews actually decrease performance almost a third of the time.

Managers don’t seem to feel any better about them. Second only to firing an employee, performance reviews are widely reported as managers’ most dreaded task, and 58% of them consider the practice ineffective and a waste of time.

So if neither managers nor employees think annual reviews are effective (or pleasant), why do we keep doing them? Well, clearly there has to be some way for managers to provide feedback to those under them. Annual reviews are what we came up with a long time ago to provide a structure for doing this, and most companies just haven’t yet found a better alternative, or even thought to seek one. But with turnover costing tens and sometimes hundreds of thousands of dollars a year and low employee morale resulting in decreased productivity, companies are starting to reevaluate all the ways in which they can increase employee engagement and job satisfaction. One of these is by taking a second look at their evaluation systems.

The first step, of course, has been to try to figure out what’s wrong with annual reviews—why they’re not working and why everyone hates them. This is no small list. To start, the impersonal nature and the infrequency of these reviews tends to make them feel irrelevant to employees, who resent being essentially graded on their performance by individuals with whom they rarely, if ever, work directly. And understandably so. Annual reviews tend to be boiled down to a couple of hours and a few numbers that are expected to represent a whole year’s worth of work. They are often extremely subjective, based on the assessment of just one or two members of the management team and on only a few aspects of the job, usually those very generic aspects that are common across departments. Employees end up feeling unjustly criticized and even threatened, since wage increases, promotions, and even job security tend to be closely tied to these evaluations. No one likes to feel that way and no decent person likes to make another person feel that way.

So what are the alternatives? In recent years, review policies in organizations large and small have been revamped to include new methods and approaches that aim, for one, to alleviate some of the anxiety associated with annual reviews. Their efforts are starting to yield myriad and creative results. At the top of the list? Back to basics. Just give feedback (positive and negative) as it comes up. This keeps criticism relevant to the employee and the work being done, providing employees with a much-needed context for corrections. It also creates space for a more cooperative exchange and keeps communication channels open, allowing management to work with employees to find immediate solutions to problems that arise, avoiding prolongation of the problem and increasing engagement.

FindMyShift has laid out a number of other problems with and alternatives to annual employee reviews in the infographic. We suggest you check it out.

Author’s Profile:

Mark Feldman is the CTO for Findmyshift.com. Findmyshift helps companies organize staff with versatile time tracking and scheduling capabilities. See more of Mark's posts at http://www.findmyshift.com/blog