Is it Time to Challenge the Performance Review Process?

September 25, 2019

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Is it Time to Challenge the Performance Review Process?

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It is that time of year, the time when most company leaders face the annually dreaded challenge of employee performance reviews. It is actually a shared dread, as employees look forward to the process even less than their leaders do.

According to Gallup, “only 14% of employees strongly agree their performance reviews inspire them to improve” and “it costs organizations as much as $2.4 million to $35 million a year in lost working hours for an organization of 10,000 employees to take part in performance evaluations – with very little to show for it.”

If no one enjoys the enormously costly process that apparently has little to no ROI for the company or value to the leaders or employees, why do companies continue this annual and expensive exercise?

Many companies have realized the futility and waste involved in the process and are discontinuing the formality. Others are a little more reluctant to let go.

The review process does retain some value.

  • It requires leaders to schedule a time with each employee to review their work.
  • It provides HR the documentation needed to substantiate pay raises and other incentives.
  • It gives employees at least some basis for knowing how they are doing in their current role and to know if there are opportunities for advancement.

In this regard, there is some method to the annual madness.

But are there better ways to set goals, provide feedback, measure progress, and quantify value?

The answer may be, “Yes.”

In today’s business world, annual planning is a challenge. While a company must have annual goals, they must also practice great agility within that framework. Opportunities and technology can change the dynamics on a dime, and companies must be able to shift and respond to those which make the most sense for their business.

This is partly why annual reviews and employee goal setting does not work – they could be inhibiting progress. For example, if an employee’s goal for a year is to complete a certain project but that project is scrubbed in lieu of a better opportunity, this reflects poorly on the employee. Or it could mean that an employee is working on one project when they would be better suited and more effective at another.

Quarterly vs. Annual Planning

Perhaps a better approach is to set agile annual goals that are reviewed quarterly to determine current feasibility. And to focus more on quarterly goals that can be broken into monthly and then weekly benchmarks. This type of planning means leaders and employees are communicating on a more frequent basis and that it is more on a collaborative level instead of a “report card at the end of the year” kind of setting. Quarterly incentives and awards provide short-term rewards and promote long-term motivation.

Team Goals vs. Individual Goals

In the past, the leader of a team generally got the credit for goals achieved. But, increasingly, goal achievement is a result of team collaboration. While individual achievements should be called out, congratulated, and rewarded; there should also be team goals and incentives for all who have played a part in the success.

Potential vs. Roles

Companies lose a great deal of potential in employees who hit the proverbial glass ceiling in a position. An assistant, for example, may grow well beyond the role. But because he or she was hired for a certain role, it can be hard to be identified beyond that role.

As a result, companies go to great expense to hire someone from the outside, when the talent they need may be right outside their office door. For this reason, it is important to look beyond role to potential. This requires that leaders actively observe the skills, accomplishments, and personalities of the individuals on their team and that they choose those who are the best for any given responsibility.

Where quarterly goals are set and met, it is a win-win-win situation. The leader sees results; the team receives more frequent reward for their work; and HR has quantifiable data to support pay structure and incentives.

Where both team goals and individual goals are set and accordingly rewarded, there is greater collaboration, feedback, and job satisfaction.

And where leaders train themselves to see potential first, they will see renewed excitement for the work and greater efficiencies.

And that annual dreaded performance review could be a thing of the past, replaced by a new and better model for success.

For more resources on how you can maximize the potential of your team, click here to learn about the Maxwell Method of Communication Impact Report.

As the CEO of Strength Leader Development, Deb Ingino is a highly sought-after international executive mentor, coach, trainer and speaker. Deb is well versed in global business operations and helps business leaders and their teams to discover and leverage their strengths, so they can create highly collaborative teams that deliver great results. With a refreshingly direct style, Deb helps leaders and their teams to deliver profitable results. Connect with Deb to learn more about her mentorship and coaching programs to equip you with advanced strategies to elevate your results.