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Traditional annual reviews for employees, which use numerical scales and curves to rank people based on their performance, are fast becoming dinosaurs in today’s business world. Referred to as “rank-and-yank” systems by some employers, they assign scores to workers relative to that of their peers.

Pay-for-performance still works, as it should, just not through a simple rating process. For myriad reasons including the need to attract and retain top talent, companies have begun dropping annual rating systems in favor of managers having ongoing dialogues and coaching opportunities with their team members.

The Proof Is in the Numbers

Ditching that one-to-five ranking scale or evaluation of employees on a performance curve is a growing trend.

  • According to a study released early last year, approximately 30 large companies representing more than 1.5 million workers had adopted a method of regular performance-oriented feedback and conversations between managers and their teams. Research has also shown that direct reports of managers who check in on progress towards weekly goals – versus holding off to annual reviews – are up to 24 times more likely to achieve them.

Coaching gives employees the feedback loop they need to continuously improve their performance. Traditional annual reviews are simply no longer relevant to the ways people work; this is especially typical among millennials, who crave frequent input and want to be part of the company conversation.

Stop Managing Performance and Start Developing It

Today’s employees want regular dialogue, open communication and collaboration with their peers. By contrast, a study at Kansas State, Eastern Kentucky and Texas A&M universities showed that rather than motivating employees, traditional annual performance reviews had the opposite effect – and many workers misconstrued even positive feedback received during such sessions.

  • Equip your managers to coach and empower their employees. Today’s workers don’t see their supervisors as experts in certain subject areas the way their predecessors did, because all the information they feel they need is available online. Instead, they look to their managers for coaching and mentorship.
  • Employees need ongoing performance development to know when they’re moving in the right direction. Simply by checking in more frequently, managers can enhance employee engagement and productivity. Setting regular, smaller-scale goals for employees offers them real-time, agile feedback that actually works.

For more than 30 years, StaffMasters has provided targeted solutions to performance management and other workforce challenges throughout the Carolinas market. Contact us today to discuss ways we can partner with you to help build your HR and overall business results.

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