WSJ: Annual Reviews And OKRs Are A Terrible Way To Evaluate Employees

Wall Street Journal:  Annual Reviews Are a Terrible Way to Evaluate Employees, by Marcus Buckingham (Author, Love + Work: How to Find What You Love, Love What You Do, and Do It for the Rest of Your Life (Harvard Business Review Press 2022)):

Gallup data from the 2020 version of their continuing workplace research reveal that 86% of employees don’t think their annual review is accurate. In a 2018 Adobe Inc. study of a representative sample of 1,500 office workers, 22% reported that they’d even burst into tears during their review.

For millions, the annual performance review is akin to going to a bad dentist: Before you go, you dread it; while you’re there, it’s painful; after it’s done, nothing’s fixed. And yet the annual review remains a reality for most workers. ...

The failings of the annual performance review fall into three broad buckets:

They are too infrequent.
Goals set at the beginning of the year are irrelevant by the third week of the year. Data from ADP’s human-resources systems reveal that, after inputting their goals, fewer than 4% of people go back and check their goals even once during the year. In the real world, your actual work has precious little to do with your goals. Work happens in a continuing flow, hour-to-hour, day-to-day, week-to-week. ...

They are dehumanizing. ...

They are irrelevant to real-world performance.
Each worker is unique in what they love and loathe about their work. Even those who excel at the very same job excel differently—excellence in any job is idiosyncratic. Research from the ADP Research Institute’s series of global studies of more than 50,000 workers from 27 countries reveals that workers who report they find love in what they do, and are good at it, are far more likely to be engaged, resilient, and experience less stress on the job, regardless of what their job is. They are far less likely to express an intent to leave, or even to be actively interviewing for a new job. ...

The annual review should be dead, a relic of MBO’s, KRA’s, OKR’s and all those falsely precise acronyms spawned in the Jack Welchian 80s and Andy Grovian 90s. But they aren’t. They live on—still today, OKR’s lurk inside the performance appraisals at many Silicon Valley tech giants. And they are among the reasons so many companies will wonder why they can’t keep their talent. Why one day ... sound, hardworking, well-intentioned people suddenly up and quit.

The irony is that the solution—what should we replace them with—is quite simple. Split the annual review in two: performance measurement and performance development. Do the performance-measurement part once a year, if yours is the sort of company that hands out variable compensation once a year. Though even here, you can drop the rating and just go straight to offering the worker the variable comp you feel they deserve—no need for the dehumanizing fakery of the forced-curved rating.

And do the performance-development part the way all good coaches (and good parents, yes?) do it: Ask every manager to check in with each team member for 15 minutes every single week. In the check-in they’ll ask just a couple of questions: What did you really love doing last week, and what did you loathe? And, What are your priorities this week and how can I help?

These check-ins aren’t for delivering feedback. Workers want attention, not feedback, and mostly attention on where they’ve shown glimpses of something good, and how they might show more of them. Cisco has tracked more than 3 million check-ins over the past four years, continuing them as a way to stay connected to their employees through the pandemic. Those managers who check in with each employee for 15 minutes every single week drove employee engagement—how committed and excited each employee is at work (as measured by surveys)—up 77% and actual first-year voluntary turnover down 67%.

When we humans get this sort of frequent, light-touch, in-the-moment attention on what we love to do and how to do more of it, we stay, we stay connected, and we stay productive. When we don’t, we up and quit. ...

Rather than focusing on managers’ span of control, companies should focus on their span of attention—and get it right, so that each manager can check in with (not check up on) each worker. Replace the expensive and cumbersome annual review with a weekly light-touch check-in, and companies may very well solve not only their hiring and attrition problems—but their well-being and productivity challenges too.