FORTUNE LEADERSHIP

How to Give an Annual Performance

Review (If You Must)
Anne Fisher,
Updated: Dec 19, 2016 9:54 PM India

Dear Annie: I just had to give year-end performance evaluations to each of my 16 team
members, and I feel like the whole exercise was a total waste of time. That’s partly because I
was unexpectedly promoted into this team-leadership job in August, from a different part of
the company, and my predecessor didn’t keep any written notes, so my data about what
people were doing for most of the year are pretty hazy. But beyond that, I just don’t feel like
our discussions produced anything useful. Our department’s 2016 numbers are looking
great, and we’ve had very little employee turnover this year, so I’m assuming people are
fairly happy in their jobs. So what is there to say besides, “Keep up the good work”? As
you’ve probably guessed, my company doesn’t offer any formal training in this area. Any
thoughts? —Just Jean

Dear J.J.: You’re far from alone in thinking annual employee evaluations are a waste of
time, but there are ways to make these conversations worthwhile.

First, a bit of context: Research has suggested for years that yearly evaluations don’t affect
performance much, if at all—perhaps in part because they tend to reflect the biases of the
reviewer more than anyone’s actual job performance, especially when it comes to how
women are rated. No wonder, then, that lots of companies, including IBM, Adobe, and
Microsoft, have overhauled their performance-appraisal systems, ditching one-a-year
employee evaluations in favor of continuous feedback in real time.

Still, according to compensation consultants Willis Towers Watson, only about 10% of the
2,004 companies (441 in the U.S.) in its 2016 Global Talent Management and Rewards
Survey have either abandoned annual reviews or plan to do so in the next 12 months. That’s
despite the fact that only 63% of these employers think yearly evaluations do anyone any
good.

Employees tend to share that dim view. About half of the 3,105 U.S. employees in the study
think that these discussions are, as you put it, “a total waste of time.” Consider: Just 54%
believe their performance was accurately evaluated in their most recent review, and even
fewer (45%) say a performance evaluation has helped them get better at their jobs.

“Employees are increasingly frustrated,” notes Ravin Jesuthasan, managing director of talent
management at Willis Towers Watson, adding that the star talent you most want to keep may
be the least satisfied of all: The study found that only 51% of employees believe “people are
held accountable for their individual performance.”

So where does that leave you? Happily, the research also shows that, among employees who
do believe they have benefited from an annual review, by far the biggest reason was that their
boss had the “necessary skills” to do it right. Jesuthasan isn’t surprised, by the way, that your
company hasn’t trained you in those skills. “Most employers don’t,” he says, “because they
think it’s easy and that ‘anyone can do it.’” If only.

Jesuthasan has these three suggestions for you, and for anyone else who wants to make an
annual evaluation more productive:

See yourself as a coach.

If you see your role in the appraisal as what Jesuthasan calls “judge and jury,” you’re less
likely to get to the reasons why someone’s performance isn’t as great as it could be.
“Managers too often focus on the end result of what an employee has produced, whether it’s
$X in sales or Y number of widgets,” he observes. “But rather than looking exclusively at the
output, look more closely at the input—the day-to-day details of the work itself and the
person doing it."

Particularly since you were brought in from another part of the company, so that you may not
be as familiar with the people and processes here, “don’t just assess each team member’s
final product,” he suggests. “Good leaders troubleshoot continuously. It’s time-consuming,
but 10 or 12 short conversations a year always have much more impact, on the organization
and the person, than one session at the end.”

Ask questions. Lots of questions.

It’s tempting in an evaluation to do most of the talking, but carve out enough time in your
schedule so each team member can talk, too. You need to hear not only how he or she thinks
the work is going right now, including any hurdles you might be able to help clear away, but
also how this job fits in with a particular team member’s long-term career plan. “Do you
know what this person has done so far, and what their strengths and weaknesses are? Is his or
her current job using those strengths?,” asks Jesuthasan. “Has his career reached a plateau? Is
there a logical next move you can talk about?”

A two-way discussion achieves two things. First, says Jesuthasan, “Asking an employee how
she thinks the year went provides a perspective you really can’t get any other way.” It may
surprise you. And second, holding on to millennial talent in particular often means showing
young workers that you’re thinking about their future with your company.

Tell how her work fits with the company’s goals.

Even if it seems obvious to you how a person’s job relates to the larger organization, it’s not
necessarily clear to employees, so spell it out. This is also a chance to talk about your team’s
goals for the coming year, and what you need team members to do toward getting there. “We
all want to be better at our jobs,” observes Jesuthasan. “People need to know about their
strengths and shortcomings, but also, how do I navigate the organization? Managers are often
too busy or distracted to give people the information they really need to see the larger
picture.”

While you’re at it, you might want to make sure team members understand what their
evaluations are based on, including what exactly is being measured, and how improvements
in performance are noted (assuming they are). Convey that clearly, and you’ll be ahead of the
game. Only 54% of employees in the Willis Towers Watson survey told researchers that their
companies do “a good job explaining the performance management process.”

Good luck!