It is annual review time for many companies – the time of year to reflect on the last 365 days and give a rating to our employees on their performance. In recent years there is a movement to do away with the annual review.

I have heard a variety of excuses for eliminating this annual event, including: “no one takes it seriously, it is a waste of time”; “we have other priorities right now”; “all they want is the money, they don’t care what we say until we get to the raise”; “senior management won’t do it, why should we”.

These are EXTREMELY valid reasons and if these are floating around your company (or inside your own head), you may want to step back and rethink the annual review, but probably not for the reasons you are thinking. The annual review CAN be a very valuable event for the entire organization. It can facilitate conversations between managers and employees about their current state and what lies ahead in the future. It can be an opportunity to plan for the next 12 months both personally and professionally. It can be an excellent opportunity to celebrate all of the success over the last year. However, that is not usually what it is. It is usually a quick conversation that is indeed a waste of time, until you get to the raise. So, how do you make the annual review useful?

Tips for a successful annual review process:

  • The annual review should not be the first or only time you are speaking to your employees about their performance. This should be an ongoing conversation. Employees should ALWAYS know where they stand.
  • The annual review should not just be a meeting to talk about money. While you can include “the raise conversation”, I highly recommend making two separate meetings. If the employee knows you will talk about money at the end of the meeting, they are much less likely to pay attention to anything up until that point. By holding two separate meetings, one to talk about their review and one to talk about money, you are much more likely to have their full attention.
  • It is important to get the employees input in the process. Instead of having managers write the annual review in a bubble, make it an interactive process. The employees will be more engaged and committed to the process if they had a hand in the development of the review and their rating.
  • Make the experience as positive as possible for the employee. Include their accomplishments form the last year and how they can grow in the next year. While not all employees have an abundance of positive accomplishments, every employee has something positive that they have accomplished. As a manager, keep an ongoing list of your employee’s accomplishments to make the annual review easier to complete.
  • Think of the annual review as the employees individual strategic plan for the next year. Just like your company and your department create a strategic plan to outline next years’ goals and focus, consider the annual review your employees individual strategic plan to outline their goals and focus for the next year.

The annual review can be a beneficial and engaging process for the employee, manager and the company. Rolling up ratings can help the organizations see who the A players are, as well as who may need some extra guidance next year. Looking for trends in management’s scores can identify high performing departments and can also help identify where you should be focusing more of your attention. The key to the process is to actually take the time to make the process meaningful for everyone involved and not an annual task that you begrudgingly check off your end of year to do list.

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