The Top Reasons Why Firms Need to Ditch Annual Employee Performance Review

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Hong Kong employers need to scrap their annual employee performance reviews as workers in the city find them demotivating and well-known firms worldwide have started to discard this outdated evaluation method.

According to a results of a survey released by Morgan McKinley recently, 78% of employees feel that they are not reviewed accurately while 66% disagree with their managers’ feedback during the annual review. 

In addition, 72% of managers also admit that they experience disagreement regarding feedback and scores given. 

Feedback from employees regarding this practice include “Relying on the annual review doesn’t allow us to solve problems timely”, “It needs to be more frequent”, “This is based on recent performance rather than overall performance”, Morgan McKinley said. 

Continuous performance management preferred

Employees prefer continuous performance management over annual review as they feel the latter limits collaboration and communication with their managers, the recruitment firm noted. 

65% of employees said the annual review was not motivating to them while 55% were unhappy with the amount of daily feedback they receive from their managers. 

In contrast, 44% of employees said continuous review improves collaboration with their managers and allows them to solve problems quickly. 

Also, 62% of managers stated that this practice allows them to have a two-way communication with their team members and coach them so they could improve throughout the year. 

However the biggest challenge for managers is to the time taken to conduct this practice which can be even more difficult when managing bigger teams, Morgan McKinley pointed out.   

“Regardless of performance review style, clear goals must be set and performance reviewed against metrics, said Reina Cheng, Managing Director, Hong Kong, Morgan McKinley. “Managers need to be trained or they would fail to meet team members’ expectations on running the process.”

The biggest obstacle

The survey revealed that one of the biggest issues faced within performance review was defining clear metrics and measuring performance against those, Cheng noted. 

Employees feedback include “Goal alignment is not clear”, “Direction and requirements change quarterly”, “Certain performance index do not relate to performance”, she added.

“Ultimately the performance review process must be approached from the perspective of building engagement. Managers must be trained on communication, review process and defining clear goals,” Cheng advised. “HR managers are also advise to drive this process and guide both managers and employees to ensure employees are kept engaged and motivated.”

Big names that have ditched annual performance review

A number of big companies announced even three years ago or more that they were getting rid of the dreaded annual performance reviews and revamped their review processes.

Some of them include Accenture, Deloitte, Microsoft, Adobe, Gap, Medtronic and, having realised that the old way of conducting performance reviews is flawed and ineffective.

Accenture CEO Pierre Nanterme once mentioned his company was not longer sure whether the time spending on performance management yielded a great outcome and the traditional performance management system didn’t click with Millennials.

He added that a firm would lose Millennial employees if it still put them in the box of the performance management used and unchanged for the past 30 years.

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