Are annual reviews going away?

Topic: Are annual reviews going away?

With the U.S. job market still robust and unemployment low, more companies are moving away from formal annual performance reviews and performance improvement plans (PIPs) in an effort to reduce manager criticism and share feedback in a more constructive way, according to experts.

Smaller employers in particular have become more focused on motivating employees rather than micromanaging.

“Some have built them in and others have done away with them, especially as there has been a fair amount of reporting that annual performance reviews are not terribly effective and employees don’t value them,” Steve Saah, executive director for finance and accounting at Robert Half, told FOX Business.

Overall, he says, performance reviews are more commonly conducted at larger or publicly traded companies.

“For those organizations, it has become part of their regular process, and although the process itself can change over time, the reviews are still firmly a part of their business structure,” Saah said, adding the policies regarding performance reviews at smaller companies tend to fluctuate.

The annual review tends to be a very formal process that can have a negative connotation.

“Many organizations, especially smaller firms, have surveyed their employee base and found that many employees don’t find the review process all that effective,” Saah added. “Given that feedback, many companies have adapted their processes.”

In addition, workers today have unprecedented choice despite a recent slight cooling of the once white-hot job market, said Joe Galvin, chief research officer with Vistage in Stamford, Connecticut.

“The notion of ‘performance evaluation’ needs to be more than an annual HR exercise, but rather an ongoing dialogue about objectives, performance accountability and development,” said Galvin.

Topic Discussed: Are annual reviews going away?

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