Annual performance reviews – are there better options?

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HR researchers argue that many organizations will replace performance reviews with consistent coaching.

The future of work is being redefined by the realities of the current era and the rise of technology in workplace. Some of the workplace HR practices are seeing transformation. For many leaders, performance should be continuously evaluated, and feedback should not be put off; this can mean the end of annual performance reviews, in favor of ongoing, real-time feedback. While some may view this as rash and inhibition to employee growth, others see this as a natural progression in a fast-moving economy.

The goal of performance reviews is to help employees and organizations improve. But what we see today is that they do not adequately serve this purpose. A 2019 survey found that more than half of the workers do not believe annual reviews improve their performance. Companies spend lot of resources on annual performance reviews. Leaders should instead be investing in regular check-ins and better hiring practices that are actually proven to advance employees’ development.

Many thought leaders argue that feedback must be a greater, ongoing investment, and must be provided in real time on a continuous basis, rather than just once or twice a year. They recommend moving to an ongoing evaluation and conversation in which employees are told if they exceed, meet, or fall below expectations. Instead of allowing employees to cruise without receiving feedback for improvement, leaders should provide immediate evaluations and indicate the circumstances in which employees are let go.

While this may sound harsh, an underperforming employee can become a drain to the company and to their teammates, and snowball into harming the entire company culture. Not to mention, this can cause the underperforming employee great prolonged duress when allowed to slog through an ill-fit position under the pressure of a PIP for a drawn-out period.

Team Excellence starts with Excellent Hiring Practices

When hiring is done with care, it allows an organization to select qualified and strong candidates from the start, reducing the need for reactive measures like PIPs. When the right people are in the right roles, everything functions better. Although employees must deliver on the requirements of their role, the obligation to hire the right person is on the organization.

This starts with accurate and clear job descriptions, the solicitation of candidates, the candidate assessment process, and an effective onboarding program.

The ripple effect of hiring decisions can alter the state of a workplace for decades to come. Leaders must show willingness to modify established systems for the betterment of the company. Hiring processes can be improved at the onset.

  • Rewriting job descriptions to ensure clarity and a completeness of the responsibilities and expectations associated with success in the position.
  • Joining job boards with highly specific skill sets to align with the related job.
  • Offering executive coaching to ensure the interviewer is equipped to identify elements that may signify a strong or weak fit.
  • Developing a strong onboarding process that sets up the new hire for success.

Coaching in place of Performance Reviews

Organizations that leverage evidence-based professional development tools such as coaching can instill a company-wide culture that hires, on-boards, and develops the right people from the start. Impacts of coaching for employees include improved communication skills, work/life balance, individual and team performance, business management strategies, as well as increased self-esteem, productivity, and well-being.

This approach is far more proactive than performance reviews and can address employee challenges while they’re small, preventing the need for significant interventions later. Personalized and ongoing support focuses on individual growth and skill enhancement. Unlike periodic reviews, coaching allows for continuous improvement, addressing challenges in real-time and tailoring development plans to individual needs.

Beyond the proven impacts of professional development tools, such as coaching, a culture shift can also play a significant role in meeting the needs missed by performance reviews. A 2023 Defining New Coaching Cultures study evaluated the implementation of new cultures driven by a coach-approach. It found that a coaching culture directly correlates to strengthened leadership development, boosted employee engagement and commitment, improved team functioning, and elevated job satisfaction.

For those who were hired into the right position and are already performing well, coaching can serve as a tool for continuous growth, focusing on refining existing strengths and honing them for leadership positions. It also creates a more positive company culture by getting ahead of potential burnout and reducing employee turnover. Coaching can target specific skills gaps, build confidence, and support a plan for reskilling to ensure employees are bringing their best to a given role.

Thanks to forward-thinking leaders who are bringing attention to the negative impact performance reviews, I believe many more organizations will move away from sporadic performance reviews towards consistent coaching.

Coaching, as an adjunct or a replacement for traditional performance reviews, offers a more consistent and individualized approach to feedback. Rather than placing the responsibility on leadership to provide a plan for improvement, it places expectations equally on the individual to establish their own pathway to success through a culture driven by learning and development. The vision for a new approach focused on a “fair, two-way conversation” that pursues continuous pursuit of excellence is more suitable for the success of both the organization and the employee. Forward-thinking employers will shift their investments to make the right hires, provide continuous feedback, and invest in their company cultures. And I believe all workers should be prepared for this shift.

About the Author

Sohena Hafiz, president at Ascent Innovations LLC.

Helping in enterprise transformations, working with leaders to bring about a sustainable change to optimize operations, digital modernization, and employee empowerment.

sohena hafiz

Author: Sohena Hafiz