Is it time to rethink annual appraisals?

Appraisals have been a popular method of assessing employees since the 1950's. Throughout the years, the annual appraisal has been chopped, changed and challenged, but the standard concept has stood the test of time. So, why are we now seeing trends in employers looking for new ways of evaluating their employees? 

Annual appraisals were initially introduced to replace personality-based testing, created to advocate a more performance-based approach to employee assessment. They look to develop the workforce on a long-term scale, identifying areas that employees can improve upon to best support their growth; as well as understanding the strengths that will successfully carry them forward.  

How can annual appraisals benefit employees? 

Relationships between employees and their managers 
Appraisals create an opportunity for managers and employees to engage in open and honest communication. Building trust and strengthening the professional relationship. 

Self-improvement 
We, as people, are rarely successful in evaluating our own performance. Whether we’re too hard on ourselves or overly confident, it’s difficult to make an impartial judgement on our own abilities. Annual reviews allow an external influence to identify our areas for improvement more clearly than we can. Having clarity on strengths and weaknesses allows employees to develop the skills that will best further their careers. 

Productivity and motivation 
Research into the highest drivers of employee satisfaction found that people feel far more satisfied at work when they receive appreciation for the value they bring to a business. Improving workplace satisfaction has been proven to increase an employee’s motivation to perform well –ultimately leading to higher productivity. 

Goal setting 
Alongside appraisals allowing time for employees to reflect on the year’s work and re-align themselves to meet new and future company objectives, the annual appraisal also functions as a goal post itself. Having a date in the diary where employees get the chance to discuss their successes and new ideas gives them a specific deadline to work towards. 

So, why might businesses want to reconsider annual appraisals? 

Extensive research into the impact of appraisals has found results to discredit the use of the assessment method. Here's why annual appraisals are under fire: 

The impact of constructive feedback 
Whilst constructive criticism doesn’t necessarily intend to be critical – even employees with the thickest skin have been shown to be disheartened and deflated by constructive comments received in annual appraisals. This deflation can lead to decreased morale and lower self-confidence for the employees that receive the feedback. 

Subjectivity 
It has been argued that there will always be an element of objective measurement when it comes to annual appraisals, which can be problematic when the results of the evaluations are tied to employee promotions and compensations. Some researchers have suggested that businesses need to find other objective measures to accurately assess the employee’s performance. 

Acting on feedback 
Many believe that the infrequency of the appraisal makes it too difficult to act upon. In many cases, the appraisals leave employees feeling re-energised and re-focused at work, but will this still be the case 3, 6 or 9 months down the line? It may be more beneficial for businesses that experience a large spike in productivity (following appraisals) to organise reviews on a more regular basis. 

Opening doors to discrimination 

• Gender discrimination 
  Research into the differences between male and female appraisals has identified that men and women do not always receive equal treatment. One study identified that 60% of male employees received feedback that was related to business outcomes, compared with 40% of women. In many cases, women report the comments they’ve received to be vague and not tied to concrete performance measures. 

• Differences in age groups 
  Millennial and Gen Z workers favour a working approach where they are consistently changing and developing, preferring real-time feedback throughout the year. Providing feedback in little and often amounts would work much better in allowing younger workers to be consistently adapting and improving. 

As 2019 draws to a close, many businesses may be using the end of the year to reflect on the successes of the past 12 months and the areas to be improved upon in 2020. While there is no right or wrong answer as to whether businesses should continue to use annual appraisals or look to other methods, it is important that business leaders remain open-minded to the many different methods of employee review. 

We look forward to seeing new assessments trends emerge across the next decade that truly reflect the nature of modern working and enhance the employee experience