Weekly Video Highlight

Why Annual Performance Appraisals Don’t Work Anymore

Measuring performance with performance appraisals

What is your employees’ collective opinion about your performance appraisal strategy and process? Do you know? If not, maybe now is the time to find out if it’s actually working to affect positive change, or having the opposite effect – lowering morale, sabotaging engagement, and killing motivation.

“The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly OPPOSITE of what the words promise.”
– W. Edwards Deming

The traditional performance appraisal strategy of a supervisor reviewing employees once a year doesn’t work anymore.

The workforce of the 21st century operates differently than previous generations. Continuous feedback is important for improving performance, especially for your Millennial employees. Some might see this as a need to be coddled and reassured, but we’re not only talking about positive feedback here.

Studies have shown that the feedback people really want to hear is the criticism. Even if it’s hard to give and take that criticism, it’s much harder for them to think they’re doing a good job, and then be told after an entire year that their performance is actually sub-par. Ouch. Surprising employees with reviews like this is the fastest way to demotivate your workforce.

Try Continuous Coaching

Think of your team at work as if they’re a baseball team (or any other team sport of your choice). How would you expect the coach to communicate how well they’re performing? If he sees a problem with a player’s swing, would he take note of it and wait until the end of the season to give them tips on how to improve?

That wouldn’t be coaching at all, would it? Good coaching means paying attention to the players’ performance in real time, not just at the end of the season. Getting your managers and supervisors on board with continuous coaching is the key to shifting your performance appraisal strategy away from an outdated and ineffective process to one that creates a foundation of development.

Create a Plan for Performance Management

A performance appraisal strategy doesn’t have to be a complex and daunting task. With a continuous coaching model, managers can work with each employee to develop a plan that they’ll refer to throughout the year to track progress on goals and improvements. Those goals should be both quantitative and qualitative, and answerable within these four questions:

  1. Are you doing the job?
  2. Are you improving the job?
  3. Are you living the values?
  4. Are you improving yourself?

“Doing the job” refers to how the employee has done the job as assigned – “How have you performed?”

“Improving the job” is the idea that employees “own” their jobs, and have a responsibility to continuously improve not only themselves, but the processes they execute, and also those that they observe – “What have you done to make things better around here?”

“Living the values” covers all the behavioral aspects of performance. This is why it’s so important for all organizations, no matter what their size, to have a values statement. That becomes the criteria for this appraisal item – “Is your performance consistent with our values?”

“Improving yourself” is the personal development aspect of performance. What’s the value the employee brings to the job? How has that been increased? And note, this isn’t just about training. It’s about personal improvement, however it occurs – “What have you done to improve your skills?”

Better Strategy, Better Results

Your employees are craving development in their skills and careers, and shifting your performance appraisal strategy to one that focuses on continuous coaching and management of the process will not only benefit them, but you’ll see multiple improvements in business results through that shift.

When your workforce is staying on top of the game in skills and knowledge acquisition, they’ll be more engaged in their jobs, more loyal to the company, more productive and more motivated to build relationships with team members.

We’re here to help you make that shift and give your workforce the development it’s craving! Our “Performance Appraisals” video course is designed to help you assess your performance appraisal strategy and see where it can be improved. This eight-part series of video lessons will help you understand the value of a performance appraisal process, avoid common mistakes, and design a system that best helps you and your employees work toward higher performance together.

Watch a preview of “Appraisals: A Simple System” here:


Learn from Chief Learning Officer, Ray Jimenez, how your managers can use micro-coaching to improve employees’ performance.

Micro-Coaching webinar cover

SEO Strategist at BizLibrary