Through the decades, performance reviews have evoked more groans than grins from employees. However, if they are removed from a company’s practices these days, millennial and Gen Z workers are likely to protest and proclaim that management is restricting their career growth.
Today’s workers want assessments of how they are performing at work; they just don’t want that in the outdated methods of their parents’ generation, says Ken Lloyd. The job appraisal process has undergone major changes since Lloyd first wrote “Performance Appraisals & Phrases for Dummies” in 2009, which is why he created an updated edition that was published in 2024.
“New employees in the workforce want feedback, but they want feedback that’s relevant, and meaningful, and accurate, and productive for them, so they can actually take this and build with it as a source for career development,” Lloyd told us in an SMM Podcast interview.
The first major change, Lloyd says, is that the notion of a once-a-year annual appraisal is not only outdated, it’s potentially harmful and demotivating. This aligns with what one 30-something worker in a communications and business development role told us she wants from performance reviews.
“I definitely prefer timely feedback. Making a comment or suggestion in the moment is often more impactful and helps me course-correct more effectively, especially when I’ve been part of smaller teams and offices. It’s not helpful to hear a colleague or supervisor bring up a sudden comment about your performance related to an event or occurrence that took place months ago. It makes you wonder how long they’ve been sitting on that comment and how it’s impacted their impression of you in the interim, which doesn’t exactly make for a healthy or supportive workplace.”
Increased Frequency Improves Accuracy
The old-school annual performance appraisal often generated significant levels of dissatisfaction and distress for managers and employees alike, Lloyd states. Increasing the number of formal appraisals allows for continuous feedback as well as “feedforward,” a term Lloyd didn’t invent, but one he endorses. Feedforward is a means of helping to improve performance and frame career growth by adopting a future-focused coaching approach more than analyzing past mistakes.
“Employees wait for a year to get measurable, quantitative feedback on their performance. In that year, a lot can happen,” Lloyd says. “The performance standards change, goals change, a lot of forgetting goes on. The whole loss of getting feedback tied in with your actual performance is gone. By the time that annual appraisal arises, whether it’s structured or unstructured, too much has happened for it to be really productive. Delayed feedback is hardly motivational, whether it’s positive or negative.”
Others we heard from stressed that increasing frequency of appraisals is only part of the solution. Ed Brzychcy, founder and president of the consultancy Lead from the Front, said it’s imperative to divide the three traditional objectives of performance appraisals – evaluating performance, planning development, and justifying pay decisions – into separate conversations.
When you attempt to tackle all three roles in one conversation, you get an awkward dance in which managers soften criticism because they don’t want to hurt an employee’s feelings right before discussing promotions. He recommends using regular check-ins for development and using annual reviews for evaluation and compensation.
“Don’t try to be a therapist and judge in the same meeting. Bad conversations aren’t better just because you have them monthly instead of annually,” Brzychcy says.
Lloyd also dislikes including a conversation about pay increases during a performance appraisal conversation, preferring that be a separate conversation.
“There should be a link between performance and pay increases, but money can dominate the whole interaction when we’re trying to have an open and productive conversation building on areas that need improvement, providing recognition where you’ve done well, and setting the course to go forward to learn and grow,” he says.
Tweaking the Traditional Model
Joe Campagna has worked in HR for nearly 30 years. He’s the founder of My Virtual HR Director, a New Jersey-based outsourced human resources firm and consulting service. Campagna says there is a place for the old-school performance appraisal approach as long as it comes with important updates.
Make them quarterly. This makes it easier to apply real-time, critical corrections in small bites to produce better business outcomes.
Make them easy. The harder and longer the actual appraisal, the more it gets skipped or skimped on until it is eventually abandoned. Campagna is a proponent of checklists with targeted behaviors supplemented with customizable spots for position or departmental goals.
Keep ratings short and understandable. Campagna likes a three-star rating system. Either they are performing to the goal, underperforming or outperforming. Five- and six-level rating scales are ineffective. And Campagna feels both managers and employees should be informed that an “average” rating is not only good, it’s expected for 90% of the employee base. Only 5% falls into the underperforming or outperforming categories.
Train, train, train! Managers should receive extensive training on how to provide continuous feedback, how to rate honestly, how to recognize rating biases, etc.
Incentivize appraisals. Charlie Munger said, “Show me the incentive and I’ll show you the outcome.” Managers’ own appraisals should include a goal or measure for completing the performance reviews consistently and on time. Employee performance should, as much as possible, be tied to incentives, whether that’s compensation or non-monetary recognition.
AI’s Impact On Appraisals
Artificial intelligence is dramatically impacting business processes across the board, and performance appraisals are no exception. Because AI can increase efficiency in tracking goals and provide almost instantaneous feedback, it advances the goal of having more frequent formal appraisals.
John Raisor, a writer and digital marketer, predicts that performance reviews in their current form will ultimately be extinct, one of the numerous operational changes that AI will bring into every workplace. He says employees will be able to monitor their performance at any time, and management will be able to do the same. Personalized AI will recognize exactly what each worker needs to maximize output.
AI is being used to aggregate and analyze performance data as well as writing initial drafts of reviews. Positives include more thorough data, more accurate analysis of that data, and the elimination of recency bias and other biases that can creep into reviews. The risks include a lack of empathy in providing
feedback and the absence of human connection that hopefully exists between managers and their team members.
“AI is not going to know how you feel in your role, what you want to improve on and the motivations that you have [in terms of ] how you want to progress in your career,” states leadership coach Kara Ronin in a video explanation of how AI is changing performance reviews.
Ultimately, says Lloyd, performance appraisals cannot be considered the culmination of a process, but rather what should come out of a performance review are next steps.
“The performance appraisal is not an end-all to anything. It’s part of the process of leading, managing, coaching, building your team and developing your employees.
Remember,” he adds, “as you continue to provide training that helps your employees build their skills, you’re also further developing your own training skills.”
Listening Is Learning In Appraisals
Adopting solid listening skills is critical for managing effectively in general, but especially important to have successful performance appraisal conversations. And it is important to remember that these sessions should be a conversation – not just one-way diatribes.
Ken Lloyd offers these tips for strengthening your listening skills to create more meaningful performance appraisals:
- Be totally present. Prevent interruptions and distractions. Your employees should have no doubt they’re getting your full focus and attention during your meeting.
- Let your employees talk. Don’t interrupt, cut them off or use words or phrasing to rush them.
- Restate, rephrase and summarize. It’s simple active listening. Putting their comments in your own words demonstrates your interest and involvement.
- Pay attention to what they’re not saying. Watch their body language, including facial expressions and whether they maintain eye contact. Nonverbal communication sends a wide range of important information.
- Ask open-ended questions. Using “what,” “why” and “how” questions will enable your employees to express and elaborate on their thoughts and ideas
