More than 10% of Fortune 500 companies have done away with the annual ratings as per a Washington Post. Business landscapes have changed significantly for almost every industry, they are much more dynamic and competitive than they were a couple of years ago. Organizations need to be Agile, Innovative, De-centralized and must empower employees for decision making.  When the way organizations work has changed, People Management definitely cannot be driven through the old school of carrot and stick approach.  Effective Communication, Timely Recognition, Real-time feedback, Objective and key result based performance monitoring and mentoring is the key here.

Let’s look at the 5 important reasons, to part our ways with the Standard Annual Performance reviews

# 1 Feedback has to be an On-Going Thing and not an Annual Process


Performance reviews definitely can’t be a yearly affair anymore; there should be a process for regular feedback that addresses both employees’ and organization’s business needs. It is also unfair to expect a Manager to remember and log all the incidents, performance trends and improvisation areas in his mind and communicate the same to his reportees on the D day. Even the employees are least interested in walking the memory lane and contemplating what better and how different they could have handled a project or incident which happened 10 months ago.

Feedback has to be Real-time and Periodic and Recognition has to be instantaneous.


#2 Bucketing Resources under Numbers is not an Effective Way



We all are different and have different sets of strengths & skills. A fresher might not even know what is he good at. An employee who is not performing well in a certain role can probably do wonders in some other role. The standard process of evaluating everyone from the same lens, force-fitting them under standard buckets and then give ratings at the end of the year is not being recognized as a productive exercise by most of the corporates.

Only 8% of companies reported that their performance management process drives high value, while 58% said it is not an effective use of time. Source:

#3 An Open and Effective Discussion cannot Happen in a Formal and Timed Course


When so much hype is created around this annual event of performance review and a formal schedule is set where an employee and his manager sit across the table and discuss that cautiously filled form which is going to decide the next promotion or increment, it is less likely that employees will speak their heart and have an open discussion. Employees will speak what they expect their Managers to hear rather than highlighting the challenges or improvisation areas

#4 Goal have to be Flexible to Stay Relevant for the Business


We all know how quickly the business landscape changes these days and so are the strategies and plans. Goals need to be flexible to adapt these changes and remain relevant in the business context. There is no point fixing up goals at the beginning of the year which become meaningless few months down the line and then measure performance against these dead goals.

Employees should be communicated about the organizations’ objectives timely and there should be a periodic review and re-validation of the goal settings.

It’s High time for organizations to adopt an Agile, Real-time Performance Management System. Almost 70% of the organization, have either already adopted or have decided to walk that path!

Is your Employee Performance Management effective?

Checkout our Guide to Performance Management System to learn more Or Book a Demo

Related Post

Leave a Comment