I Come to Praise the Annual Performance Conversation, Not Further Bury It

The choice between frequent performance coaching and annual reviews need not be a choice at all.

Paul Michelman Reading Time: 3 min 

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Performance Review Employee Evaluation Management

So, you’re planning to join the legion of organizations that have dropped the annual performance review. Instead, you will institute a company-wide commitment to providing feedback throughout the year, decoupling important conversations about performance from the ugly and awkward scoring used to guide the annual pay-raise and promotion cycle. You will move from a culture of assessment to one of ongoing coaching.

I applaud you. And I wish you better luck than I’ve had in keeping to all of the commitments required in such a culture.

It’s not easy to talk about performance and, as Nik Kinely and Shlomo Ben-Hur explain in the Summer 2017 issue of MIT Sloan Management Review, it is even harder to do anything about it. Effective performance coaching takes discipline, planning, and a great deal of thoughtfulness on both sides of the table. It’s sometimes not pleasant. What do we too often do when faced with difficult tasks that will not directly or immediately affect something we can measure? Yes, that’s right. That’s exactly what we do. We procrastinate. We are only human, of course.

I am not here to raise the industrial-age annual performance assessment process from its shallow grave. As many experts have noted, it is rife with faults. It focuses on what has already happened rather than on planning for what has yet to come. It can feel punitive — or at least judgmental. It is reductive and, in some cases, forces ridiculous formulaic comparisons between employees with wildly different roles and skill sets. It fails to emphasize the kind of timely feedback that actually can make a real difference in the quality of performance.

And nevertheless I have just scheduled formal, year-end meetings with each of my direct reports.

I do not believe this is an either/or decision. You can have meaningful weekly or biweekly meetings with employees as well as a deeper, more structured conversation annually or semiannually.

We are going to assess people in some shape or fashion, overtly or not. We are going to tie our judgment of the quality of their performance to their pay. Outside of the most old-fashioned models for sales-force compensation and the most cutting-edge algorithms, how we manage our employees’ opportunities for financial and career advancement remains highly qualitative.

But that’s only one piece of the puzzle.

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About the Author

Paul Michelman is editor in chief of MIT Sloan Management Review. He tweets @pmichelman.

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Comments (2)
Richard Smith
Like all modern cars, mine has an engine management system that seeks to keep the car tuned up and running its best every day.  However, about once a year I take my car to a garage where they service it.  They look over the vehicle as a whole, download the year's data from the engine management system, and take a holistic view of what needs to be done to keep the whole vehicle - including the engine management system - performing at its best for another year.

With people too, I see no conflict between the importance of excellent leadership, management and coaching throughout the year and the value of a periodic review of the whole leadership and development process.  So I too - as a leader myself, and as a professional developer of leaders for over 40 years - speak in praise of an annual performance and development conversation!
Bob Murray
As a manager of over 35 years I have experienced many different types of review systems. I find the annual review indispensable. It forces a standard and formal structure. If approached properly it is an opportunity to have a rewarding give and take conversation. A safe environment also allows the employee to comment on the manager as well as the manager to comment on the employee.  However, an annual review system can only be successful when it is augmented with timely coaching (of good and bad observations). An annual review where the employee is surprised by a rating is a failure. Everything they hear should have already have been remarked on. When I hear a manager say "I don't need to conduct an annual review with my employees because I coach them during the course of the year ", I wonder if it maybe self serving.