Are annual performance reviews obsolete?

By August 19, 2019Advice, Performance

An Australian tech company is overhauling its performance review system in order to broaden its definition of success in the workplace.


Atlassian believes the traditional annual appraisal only serves to reward what they call ‘brilliant jerks’ – workers who are able to hit key performance indicators, but are otherwise poor team members.


A ‘brilliant jerk’, for example, may be able to meet and exceed all targets set for them at the start of the year. On paper, this sets them in good stead to be rewarded or even promoted.


However, throughout the year they may have been disruptive, maintained a negative attitude, or failed to contribute towards team activities. Other employees who are a positive influence on others may be overlooked in favour of perceived ‘high flyers’ with better statistics.


Are there other problems?

It could be argued that taking such an infrequent approach to reviews leads to evaluation over development, with businesses simply holding people to account for their past behaviour rather than trying to improve their current or future performance.


One of the more well-known examples was General Electric, who’s appraisal involved ranking employees based on a numeric representation of their performance over the past year. The bottom 10% were then fired, in a system often known as the “rank and yank” method.


Naturally, both managers and employees would come to dread performance reviews. Although most organisations wouldn’t have such a harsh system in place, yearly appraisals that simply criticise underperformers can only be thought of as a short-term solution.


What is the alternative?

Instead a yearly performance review, many major organisations have moved to a model involving setting their employees measurable targets, supporting them through coaching and training, dealing with any cases of underperformance when they occur, and then conducting a review to see if the objectives have been met.


This system allows for continuous improvement, and reduces the huge workload of appraising all employees at the same time every year. It can be visualised as the performance cycle:

What Deminos can do to help

Last year, we helped one of our clients design their own method of reviewing performance. Our solution was to let the organisation’s employees initially assess themselves by completing an appraisal form.


The form set parameters, where the employee would rank themselves based on a score of one to five. However, when the employer completed the form too, it was found that there was quite a discrepancy between how the employees saw themselves and what the managers thought.


The difference was most likely caused due to there being no benchmark in place that the employees could measure themselves against. We advised setting specific and measurable objectives (with examples), so that employees would know what they would have to do to achieve a high score.


What next?

Chris Bechervaise from Deminos made a number of recommendations to our client. The objectives will be reviewed again soon, so the new system has already identified areas that can be improved along with how to achieve them.


If you’d like to learn more about performance management, personal improvement plans or how to set objectives, please call a Deminos advisor on 020 7870 1090.

Author David Ralph

More posts by David Ralph

Leave a Reply