Focus on Talent: Move Beyond the Year-End Performance Review

Managing performance should be about supporting your people to reach their full potential. Unfortunately, many organizations remain stuck in cycles that prioritize the year-end performance review cycle over one of their greatest assets — their talent.

“Talent experience is perhaps one of the most undervalued parts of a performance management buildout process,” says Andrew Hibschman, VP of Customer Success with SkillCycle. “The more you prioritize your talent, the better the outcome will be.”

Results matter, and there’s nothing wrong with being concerned with improving outcomes. Companies that focus on their people’s performance are over four times more likely to outperform their peers financially, with attrition rates 5% lower, according to McKinsey.

However, organizations must adopt performance management strategies that support talent development and eliminate outdated practices that can alienate employees.

In this piece on switching up your approach to annual reviews, we’ll explore:

• 3 critical limitations of traditional year-end performance reviews
• How ongoing feedback conversations enhance employee engagement
• The benefits of aligning personal ambitions and organizational targets
• The role of leadership in supporting talent development 

3 critical limitations of traditional year-end performance reviews

If your performance management process features annual reviews followed by radio silence for the rest of the year, you’re unlikely to connect with employees in a meaningful way. There simply aren’t enough benefits of annual performance reviews to let them be a stand-alone tool for improving employee contributions. 

“Remember that talent development doesn’t matter to employees unless it feels like it’s been designed for them,” says Hibschman. 

A performance management framework built around year-end performance reviews can have three significant limitations:

1) Recency bias in performance reviews

When evaluating an employee’s performance over a year, it’s natural to focus on recent accomplishments or challenges. This means that notable achievements or difficulties from earlier in the year may be overlooked. Employees, knowing this is their one chance to make a case for promotions or raises, are likely to emphasize recent successes, leading to a potentially less constructive appraisal.

2) Stagnation

By assessing performance only once a year, you send the message that growth and development are not ongoing priorities. This can demotivate employees from continuous improvement, as their efforts throughout the year are only acknowledged during the annual review. The focus becomes whether they did enough to warrant a raise or promotion rather than on their overall growth and development.

3) Lack of engagement 

Employees often view annual reviews as a low-value exercise with little impact on their day-to-day work or career progression. This disconnect can stem from the feeling that the process is more about fulfilling organizational requirements than genuinely supporting employee development. If there’s nothing individual about how their accomplishments are noted and discussed, employees are likely to disengage from the process. 

The limited benefits of performance reviews create a gap for leaders to add other elements to their performance management strategies, such as ongoing feedback and better alignment between individual ambitions and company goals.

How ongoing feedback conversations enhance employee engagement

Ongoing feedback conversations are key to boosting employee engagement. When employees do something great, they get immediate recognition and it’s documented right away. This means their achievements are always noted and appreciated in real time.

In contrast, addressing a challenge immediately through the year helps people learn and improve quickly, overcoming any inaccuracy or bias in performance reviews. This prevents the same issues from recurring and supports continuous growth. 

“If your team doesn’t like getting feedback, it could be because they only get it when their performance is being measured,” says Hibschman. “Ongoing feedback dissociates feedback from performance.” 

Getting performance management right can help your entire team deliver better results. According to people, risk, and capital consultancy WTW, organizations that effectively use performance management are 1.3 times more likely to have higher employee productivity.

By making feedback a regular part of daily interactions, successes are celebrated, and problems are solved promptly. This approach keeps employees motivated and focused on growth, making evaluation a continuous and engaging process.

The benefits of aligning personal ambitions and organizational targets

When companies outline their approach to goal setting or talent development, they often center everything around an employee’s contribution to an organizational goal. However, in doing so, they may gloss over significant differences between company objectives and what employees value.

“It is a fallacy held by many companies to believe that employees are employees sometimes and people other times,” says Hibschman. 

Misalignment between personal ambition and organizational targets can have disastrous consequences on retention. It’s vital to recognize that an employee is somebody who contributes to organizational goals and an individual who is developing in their career and striving for personal goals.

If employees feel they can align their goals and ambitions with what the company is working to achieve, they are essentially getting tacit approval to develop themselves personally and professionally. And they can do so while still contributing to the organizational mission.

The role of leadership in supporting talent development

To implement a better approach to talent development, leaders should evaluate any changes through the lens of their employees’ experience.   

“Start with bringing on a solution designed for employees,” says Hibschman. “It can’t be an HR-only tool.”

Ensure any solution or process you adopt is easy to use for HR teams and employees. Nobody should have to be a tech expert or be troubleshooting complex systems all day. Instead, choose performance management tools and platforms that require minimal training and are simple to use to ensure the tool is adopted smoothly and effectively.

Make it clear that performance management is about measuring performance, while feedback conversations are about growth and development. To do so, provide user-friendly ways for employees to track goals, request feedback, and access coaching. These efforts will help communicate that feedback is ongoing and integral to personal development.

Finally, model the behavior you want to see by regularly soliciting and providing feedback. Ask for feedback on your presentations and projects from peers and direct reports, and implement it. Show that feedback is welcome and used constructively.

A better approach to talent development is to consider an ongoing cycle of providing support throughout the year to drive growth and performance improvement, which can then be measured at review time. 

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