Why Year-End Performance Reviews Are Failing and How Leaders Can Fix Them
Year-end performance reviews have long been a staple in business, but recent research shows they may be doing more harm than good. With 59% of employees finding them ineffective and 95% of HR leaders dissatisfied with the process, it’s clear that traditional reviews are failing to boost productivity or morale. The problem? These annual check-ins often focus on past mistakes rather than future growth, leaving employees feeling criticized rather than empowered.
In this blog, Debi Wolfe, a 4word Advisory Board member and business consultant specializing in business transformation and culture, explores why year-end reviews are outdated and how forward-thinking leaders can shift towards a more dynamic, real-time approach to feedback that drives both employee performance and engagement.
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You can listen to this conversation with Debi on our podcast, Work, Love, Pray! Listen below or click here to find your preferred listening platform.
What led you to make a career pivot from starting two highly successful businesses to becoming a business consultant who specializes in business transformation and culture?
I’ve had a few career pivots along the way. I’ve started businesses, but I’ve also been inside corporations at the executive level. My time in those organizations were an incredibly rich and rewarding time. But I realized that it was entering a season for me to pay it forward and use my abilities to help more organizations and more people as opposed to just working with one organization. I’m really passionate about leadership. I get so much joy in seeing leaders develop because I just believe they have such an impact on people’s lives.
Leading is not just about being the manager and guiding and directing people. Leadership is also identifying how do you want to run your organization, because the more efficient and operational the business is, the more fun it is! No one wants to work at a job where they don’t love the people they work with. As a leader, you and your fellow leaders need to have an understanding of how to lead, how to structure an organization, and how to have attractive strategies.
Research has been done that shows that the traditional review process is ineffective and not a good use of anyone’s time. Can you share more about that research and what exactly led researchers to make that call?
I think people have intuitively known that year-end performance reviews have not been effective. Employees believe these reviews are ineffective. Leaders tend to view the reviews as something that have to do, so it just becomes part of a process and a checklist versus something that is actually constructive. When organizations set goals, they don’t wait until the end of the year to stop and review themselves. So why do we do that with people that are the ones actually doing the work toward those goals?
I have a couple stats to share:
- 92% of employees want feedback more often.
- 94% of employees would like leaders to address mistakes and opportunities real time.
- 59% of employees think reviews have no impact.
- 77% of HR leaders say annual reviews are not accurate.
- 95% of HR leaders are not happy with the process of performance reviews.
Those are compelling stats that very loudly show that there needs to be a facelift to the performance review process and to the purpose of them.
Armed with that knowledge, how do you recommend people in leadership roles shift from how year-end reviews have always been done to finding something that actually is beneficial to both the reviewer and the person receiving the review?
As a leader, learn to view performance reviews as more of an opportunity to find solutions and brainstorm with an employee versus only looking backwards at what has been done and cannot be changed. You want to be doing regular reviews, because as you saw in the stats above, employees have said that they want real-time feedback on opportunities to grow as well as in areas where they’ve made mistakes.
Leaders who focus their performance reviews on being forward-looking see a 13% increase in their team’s productivity, which is notable. It makes sense, though, if you think about how, traditionally, reviews focus more on the past and what could have been done better. When you constantly look back as you are reviewing an employee, it’s easy for that person to think any negativity is about them and take it personally. But, if you’re looking forward, you’re talking about a task, an action, or a goal and it’s not as personal. Forward-thinking also makes it a little easier for leaders to deliver feedback to their employees.
From a neuroscience standpoint, when we look back and talk about problems, the brain will automatically go into somewhat of a defense mode. People will stop listening to what is being said because they immediately want to protect themselves. The amygdala takes over and it’s fight, flight, freeze. If instead, you talk about moving forward, you will start putting people in a positive mindset, which moves them towards action. Looking backward points out problems. Looking forward leans towards solutions.
Debi Wolfe is a dynamic and versatile C-suite executive and entrepreneur. Early in Debi’s career, she started two successful businesses. One was a regional scientific staffing company that was acquired by Kforce, a large publicly traded staffing firm. Debi’s company was the launch pad for a new division where she served as President. Debi built the business into a top tier national player within the industry. This success presented the opportunity to sell the division where she led the sales process and divestiture efforts.
Post exit, Debi made a career pivot and became a business consultant specializing in business transformation and culture. She worked with CEOs in a wide range of industries. As a result of her successes, Kforce recruited Debi back as Senior Vice President of Human Resources with the objective to modernize the function and lead a corporate restructure. More recently, Debi was tapped to be the Chief People Officer at Hays, a global recruiting company based in London. In this role, Debi built a People & Culture team from scratch and helped integrate the business from being a privately owned small business into a large global company. Currently, Debi serves as an executive advisor, coach, and consultant.
Debi is a business minded strategist with proven success in building, modernizing, transforming, scaling, and optimizing businesses through holistic talent, culture, process, and technology strategies. Her approach is collaborative and combines her operational experience with her business development and culture expertise. She views her career as a mission and is driven by a deep sense of purpose to make a positive impact. Her greatest passion is developing leaders and building teams. Throughout Debi’s career, she has consistently developed high impact leaders and award-winning teams.