Blowing up the Annual Performance Review? Start with the Annual Engagement Survey

The Washington Post said it best:

“Big business is falling out of love with the annual performance review. Some of the world’s most admired organizations, like Accenture, Deloitte, and most recently, GE, are eliminating traditional annual processes for evaluating employee performance in favor of “more frequent conversations.”

This transition is indicative of a major shift in the way we work.

Once viewed as a traditional “rite of corporate life,” the annual performance review has now been abandoned by more than 10 percent of Fortune 500 companies. We believe this is just the beginning of a dramatic change in performance management systems and practices.

First, get rid of the annual engagement survey

The goal of eliminating the annual performance review is to replace an ineffective, often painful process for managers and employees alike with regular check-ins about development. No more high-stakes, once-a-year grades that go on your “permanent record.” Instead, a regular dialogue where feedback and course correction happen much more frequently.

If that’s our goal, then we also need to blow up the annual employee engagement survey. In fact, we should start with the employee engagement survey.

Engagement and performance are inseparable. If you improve employee engagement, you will improve performance, and your approach to performance management and talent development can have a meaningful impact on employee engagement. Yet, most approaches to employee engagement have not kept up with the pace of change and are now very outdated.

We now live in an always-on, constantly-pulsing world. We share feedback on a continuous basis, “liking” our friends’ photos and relying on crowdsourced product reviews to make decisions.

We also rely on active monitoring of our systems and activities to optimize performance. We have state of art solutions in finance, sales, marketing, and customer success to monitor results in real time and empower our managers with actionable data.

HR systems haven’t kept up

So why haven’t human resource systems evolved with the times? Why aren’t more companies keeping a finger on the pulse of employee engagement?

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Despite overwhelming evidence that frequent measurement of employee engagement levels makes a difference, 80 percent of organizations still rely on the annual (or worse, the bi-annual) engagement survey to solicit employee feedback. At the same time, organizations across the globe report an troubling inability to understand employee motivations and needs.

Attrition has become highly expensive, as more employees look outside their organizations for growth opportunities. How can we expect to get the most out of our employees when we can barely grasp what drives them to come to work each day?

Glint data from thousands of employees reveals that those with unfavorable engagement scores are five times more likely to leave in the next six months than those with high scores. After one year, they’re 12 times more likely to leave.

By gathering employee feedback on a quarterly or even monthly basis, organizations can better understand emerging engagement challenges and act to reduce employee turnover before it’s too late. Regular engagement check-ins allow managers, leaders and the HR team to take quick action to address problems and to track the impact of actions as time goes on. These check-ins provide organizations with meaningful feedback and enable them to take action to help people be more successful in their jobs.

More continuous conversations

As more organizations begin to adjust to the significant shift in the way we work together, my hope is they will start with employee engagement. More frequent feedback from employees, actionable insights from systems, and data in the hands of managers — followed by quick action to improve — will help organizations increase engagement, build stronger teams, and improve results.

To quote a senior HR executive at GE, “If you’re waiting a year to give meaningful feedback, it’s already old news.” Let’s make our people processes continuous conversations and start building strong teams that thrive.

Jim Barnett is the chief executive officer, co-founder and chairman of Glint. He's an accomplished executive and entrepreneur, having built and run several successful companies. He is also the co-founder and chairman of Turn Inc., where he was CEO for many years. Prior to Turn, Jim served as president of Overture Search, a division of Overture Services, Inc. Jim joined Overture after its acquisition of AltaVista Company, where he was president and CEO. Prior to AltaVista, Jim was President of Ancestry.com (previously named MyFamily) and CEO of Accolade.

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2 Comments on “Blowing up the Annual Performance Review? Start with the Annual Engagement Survey

  1. The Washington Post also said it incorrectly. The article posted on Harvard Business Review stated clearly that managers still have year-end reviews with employees and that compensation, promotion decisions are still based on evaluations. This is a dramatic and hopefully a landmark change in the management of performance but employers always need to be able to defend those decisions.

    The analogy I use is the role of coach in sports. They are providing advice throughout the game but they still rate their players and in the pros reward them at year end.

    GE should be thanked after the damage done by rank-and-yank.

  2. I like the concept Jim. In fact, last year at my company we had engagement surveys 3X/year. But the problem with more frequent surveys comes on the tail end – at action planning. The truth is that most organizations, teams, and managers have more going on than measuring engagement. So, we can measure it all we want, but if we don’t have enough time and resources to take actions against what we learn, then none of the measurement matters any way. That’s why we decreased from 3X/year to 2X this year. And while I agree on your retention findings (we recently learned that 25% of employees who say they will leave within 6 months do leave within a year), wouldn’t it be even better for managers to notice changes in employees, and talk to them openly about their challenges. I mean, nothing could be faster than that, right?

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