Why Some Companies Are Abolishing Year-End Performance Reviews

Written by Laura Burgess

Published on Mar 16, 2018
There are reasons why companies are moving away from the dreaded year-end performance review. According to the latest Gallup report, about half of employees are not engaged at work, meaning they’re ‘just there.’ To improve engagement, Gallup suggests updating and changing the traditional processes, including the annual performance review. You may be thinking, how was the annual performance review introduced in the first place? It wasn’t until the 1950’s when the Performance Rating Act was introduced to address worker satisfaction, which allowed companies to develop incentive programs to reward employees for good work with cash or recognition. These rewards were usually only given once a year, coinciding with annual planning activities. Nowadays, leaders in the workplace are finding the annual performance review process to be too slow, outdated, and untimely because of changing trends in the workplace.

Changes in workforce expectations, the always-connected era, and the availability of self-service software tools are pushing companies to rethink how they design their organization and reward their people.

Changes In Workforce Expectations

With new generations entering the workforce, the work environment is changing and the expectations are shifting. Today’s modern workforce wants and expects frequent feedback, collaborative work environments, and cross-functional work, putting much more emphasis on teamwork. Offices are redesigning their space to open floor plans and different departments are working together to achieve the common goals of the company. Today’s managers are also seen as coaches and mentors, relying on a more casual approach by setting up regular 1:1 meetings to discuss goals, career development, and personal growth. Rather than being a useful conversation like 1:1 meetings, the annual review process can be a source of anxiety. Research indicates that companies who replace annual reviews with more continuous feedback have happier, more motivated, and more engaged employees.

The Always-Connected Era

In addition to regular 1:1 meetings, all levels of an organization are staying in frequent contact with mobile, social, and productivity apps. Thanks to these advances in technology, people are constantly connected and because interactions are more frequent, the once-a-year conversations don’t have much meaning anymore. Not only do frequent interactions keep companies and their people aligned on a daily basis, it also fosters a culture of development and innovation. By being able to share ideas and goals on a daily basis and get instant feedback, people are much more productive, creative, and engaged.

Availability Of Self-Service Software Products

There’s also been a fundamental change in how businesses purchase and use software products. Due to an increase in self-service SaaS products like cloud-based productivity tools, project management tools, and marketing tools, software purchasing decisions have moved down from top-level executives to first-line managers and even employees in some instances. The availability of these software tools and the widespread use amongst organizations are making it easier for teams to collect real-time transactional data and allows companies to make faster business decisions. However, these products are failing companies when it comes to making informed people-performance decisions on an ongoing basis. The annual performance review process hasn’t kept pace with the changing times. Even with the increased use of software products, many organizations still depend on web forms and spreadsheets to capture and manage their annual performance review process. This process is archaic and outdated. As the trend is shifting away from annual performance reviews, companies are discovering the need to better analyze this real-time data to provide more meaningful, continuous feedback and transform their people and cultures.

So, how can we keep up with the changing trends and provide a seamless environment for continuous feedback?

Bridging The Gap With Software Platforms

By understanding these trends, All Elements has developed software that provides a unique solution to replacing the year-end performance evaluation. All Elements keeps track of important conversations, goals and accomplishments of the company and their people, and even peer reviews and accomplishments. Performance is consistently assessed to create better people and better cultures. Companies can increase engagement by using All Elements for improved and efficient communication between teams and be able to better monitor progress and tasks. By using software like All Elements, departments can better coordinate their efforts, align their goals, and improve their transparency. Away with the annual review; businesses and people need real-time performance assessments and All Elements is your solution.

Best places to work use All Elements. Join them.