Rethinking the Annual Performance Review
November 29, 2018
Korn Ferry Survey of Professionals Shows Ongoing Performance Discussions and Real-Time Feedback are More Effective
-- Nearly Half Say Goals Set During Review Not Relevant a Year Later --
-- Nearly a Third Say Reviews Have No Impact or Negative Impact on Performance --
View the Infographic here.
LOS ANGELES, Nov. 29, 2018 — A new survey of professionals by Korn Ferry (NYSE: KFY) shows that while significant amounts of time and energy are spent on annual performance reviews, they should not be relied upon as the key way to measure employee effectiveness.
The vast majority of professionals surveyed (87 percent) say they have an annual performance review with their boss, and nearly a third (29 percent) say they spend seven or more hours preparing for the review.
However, nearly all (96 percent) say real-time feedback and ongoing performance discussions with their bosses are more effective than an annual review, and nearly half (46 percent) say that the goals they set in their reviews are no longer applicable a year later when they sit down to measure performance.
“Organizations realize that managing business performance is a very dynamic process, so having a once-per-year meeting that hopes to both evaluate and improve performance is a tall ask,” said Korn Ferry Senior Client Partner Katie Lemaire. “It is still critical that employees receive regular feedback to understand how they can continually improve.”
Nearly a third (30 percent) of respondents say annual reviews have no impact or a negative impact on their performance, and 43 percent say reviews had no impact or were unhelpful at helping them understand what to do more of or differently to improve future performance.
While respondents indicate they prefer ongoing feedback to annual reviews alone, they did offer some positive thoughts on portions of the annual review process. Ninety-two percent say 360 feedback from bosses, colleagues, direct reports and clients is useful, with 48 percent saying 360 reviews are extremely useful.
More than two-thirds (68 percent) say they look forward to their annual reviews, and 71 percent say it is fair to base annual compensation increases on the result of the annual review.
“When approached effectively, an annual review can be a positive tool in helping increase performance, but it shouldn’t be the only way success is measured,” said Lemaire. “Regular feedback can help employees course correct in real time and can help them adjust as business needs change.”
About the Survey – The Korn Ferry survey was conducted in November 2018 and garnered 2,151 responses. Due to rounding, percentages may not equal 100.
Do you have an annual performance review with your boss?
Yes - 87 percent
No - 13 percent
How effective is a performance review at improving your professional performance?
Very effective - 23 percent
Somewhat effective - 47 percent
No impact - 20 percent
Somewhat ineffective - 6 percent
Very ineffective - 4 percent
Do you agree that all of the goals you established during your annual performance review are still relevant a year later when you analyze your progress?
Yes - 54 percent
No - 46 percent
Do you believe it is fair to base annual compensation increases on the results of your annual review?
Yes - 71 percent
No - 29 percent
Do you think performance reviews should be conducted just once a year?
Yes - 16 percent
No - 84 percent
What’s more effective, an annual review or real-time feedback and periodic performance discussions with your boss?
Annual review - 4 percent
Real-time feedback/periodic performance discussions - 96 percent
How useful is 360 review feedback (reviews from your peers, direct reports, clients, etc.)?
Extremely useful - 48 percent
Somewhat useful - 44 percent
No impact - 2 percent
Somewhat unhelpful - 3 percent
Not helpful at all - 3 percent
How useful is a performance review in helping you understand what to do more of, or differently, to improve your future performance?
Extremely useful - 30 percent
Somewhat useful - 27 percent
No impact - 17 percent
Somewhat unhelpful - 14 percent
Not helpful at all - 12 percent
Do you look forward to your performance reviews?
Yes - 68 percent
No - 32 percent
Taking into account the following steps: developing goals, reviewing them with your manager, and finalizing them, approximately how many hours do you spend on goal setting each year?
Less than an hour - 12 percent
1-3 hours - 30 percent
4-6 hours - 29 percent
More than 7 hours - 29 percent
View the Infographic here.
About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people.