End of year reviews: why they’re useless and what to do instead

November 22, 2023

Matthew Moore

Marketing and Digital Production Manager
Two people in an end of year review talking across a table from each other one hads a laptop the other is writing on a pad of paper

As we get to the end of the year, many organizations are gearing up for the usual round of annual performance reviews. Thrown into the calendar of manager and employee alike, they are seen as exercises in performance management, employee engagement and motivation – but are more often than not perfunctory box-ticking that achieves none of these things. Much of this can be driven by the same performance reviews of HR people, who may be measured and targeted on percentage completion and return rates.

Stressful and anxiety-inducing for the employee, end of year reviews are time-consuming for the manager who (statistics show) will invariably have not been trained in performance evaluation (or in management skills of any sort). Consequently, assessments are subjective and frequently influenced by personal relationships, unconscious bias, and recent events. That could be why “a mere 14% of employees strongly agree that the performance reviews they receive inspire them to improve” (according to Gallup).

Many organizations ally this review system with ‘forced ranking’ or ‘guided distribution’ performance ratings, whereby a fixed proportion of employees are either allowed a certain rank, or must be rated a certain way. This philosophy has been widely debunked in various places as being “disastrous for a company’s culture and morale” [Financial Times]. It is supposed to be a means of identifying high performance but succeeds in alienating the majority and destroying morale – hence why it has been ditched by Microfsoft, Amazon, GE and a raft of others.

Inevitably the focus of the review is backward – literally. Past performance is intently examined and evaluated, despite the fact that many of the issues relating to that performance are long gone, either resolved or no longer applicable. Consequently, the praise due or improvement required is too late to be effective, thus stunting employees’ growth and potential.

Even when an end of year review does manage to focus on an issue that is relevant and timely: what happens when the feedback is vague and indistinct, which given the aforementioned lack of management training, is entirely possible? Should we wait a year before the next opportunity to say “well, that didn’t work – what’s next?”

What to do instead of end of year reviews

Far more effective – and the preserve of the effective manager and culture-driven organization – is continuous feedback delivered in a coaching style. Regular, meaningful conversations focused on work progress, development and mutual expectations.

Research has shown that these meetings are more productive and effective, and less time-consuming or stressful. They are more impactful, tend to be more positive, and even more creative.

This is because there is less weight on the meeting – done regularly, both parties are more relaxed and they don’t need to take as long. Any issues are still relevant and strategies for improvement can be discussed, agreed and tested before being reviewed in a timely fashion. Motivation and engagement can be monitored more closely and, most importantly, more actively. Employees will inevitably feel more valued and more heard.

The manager as coach leadership style does even more to drive creativity, commitment, and energy by giving support and guidance instead of asserting command and control. According to the Harvard Business Review, having coaching skills – active listening, empathy, problem-solving – is more likely to facilitate effective conversations, problem-solving and employee engagement.

In addition, mounting evidence shows that strength-based conversations can be highly effective. This is where focus is put on employees’ strengths and how to get the best out of them, rather than deficiencies and ‘problem areas’.

How to successfully implement continuous feedback

Of course, continuous feedback isn’t as easy as end of year reviews. The right culture must be in place for it to happen, and for it to be effective this should include:

Manager Training. Instead of assuming the skills are in place, managers need to be trained in how to provide feedback in a way that is supportive, encouraging, and actionable.
A Supportive Culture. Employees must feel empowered to give and receive feedback. The organizational culture must be one where feedback is seen as a positive tool for development.
Feedback that is specific and actionable. Managers must ensure that that the conversation outcomes, directions and goals are clearly communicated and understood. Employees must know what, why and how they need to improve.
Focusing on the future. Feedback should concentrate on helping employees to improve in the future, not dwell on past mistakes.

Ultimately, there has to be a feedback and review process in place to ensure that progress is monitored, performance managed, and issues dealt with. But in order to deliver the benefits of improved performance, identifiable talent gaps, improved retention and enhanced organizational culture, it should be continuous and focused on the individual, their strengths, and the future.

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+91 955 271 5800

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+44 (0) 1276 686644