Making the Grade: Why Companies Benefit from Annual Performance Reviews

shutterstock_350473172Last year, a number of major companies from Adobe to General Electric announced they were doing away with the annual performance review. Around that same time, new research showed that millennials—who became the largest share of the American workforce in 2015—didn’t like them.

It may seem that this annual event is undergoing a slow, spiraling death. Research shows that about 10 percent of the Fortune 500 companies have eliminated them. But companies that fail to conduct the annual performance review are missing the boat, believes Sandy Seay, president of Seay Management Consultants Inc., which has been retained by NPMA to provide member companies with human resources consultation.

“It’s critically important,” Seay said. “But it takes a lot of time and you can’t put a dollar amount on the value it offers your company like you can if you are running a route. Companies certainly are not intentionally leaving it out of the picture. They just get busy doing a lot of things.”

One way to get around the busyness is to conduct the review in the employee’s anniversary month instead of clustering all the reviews at the end of the year. Regardless of when it occurs, though, the annual review can point the way to critical decisions that need to be made, Seay believes.

“So many clients say to me, ‘I wish I’d done a performance appraisal; I could have made a decision a long time ago,’” Seay said.

While the review may reveal shortcomings—and offer an opportunity to correct behavior—it also may show who is ready for a promotion. Either way, the review provides documentation for the decision.

By Sandy Smith

Click here to read more.