Why the Annual Performance Evaluation Is Disappearing

Benjamin Franklin once said that “When you’re finished changing, you’re finished.” So as painful as change can be, unfortunately it’s a pain we must endure. In today’s world where nothing is constant, change is everywhere and instant gratification is an expectation, employers must keep the pace if they want to run a marathon. Technology and its constant evolution has changed the way we look at, and perform, our jobs. We all know by now that millennials want not only a work-life balance but also more engagement and opportunities from their employers for great work life fulfillment. As part of that engagement, employers must seriously consider doing away with the annual performance evaluation—with a strong emphasis on the word annual. Performance management is crucial to an employer’s success and without the appropriate tools, we set ourselves up for failures, such as employee dis-satisfaction and ultimately employee turnover. As we look to innovate the way in which we sell and perform our legal services, we would be remiss if we did not allow for innovation in the way we manage our greatest resource—our human capital.

Performance evaluations by definition are designed to show employers if employees are individually meeting their goals and expectations and to determine if the company as a whole is aligning its workforce strategies with business objectives. In the past 75 or so years, employers have bounced back and forth between an accountability system to dismiss poor performers to a development system that encouraged goal setting and engagement. However, in the past eight years, we have seen a number of companies do a hybrid of the two where they either drop annual performance evaluations altogether (Kelly Services, Adobe) or reinvent how they use performance ratings (PwC, Deloitte). In an October 2016 article for Harvard Business Review, Peter Cappelli and Anna Tavis wrote about the performance management “revolution” that employers have implemented over the last 15 years and how today approximately one-third of U.S. companies have begun to abandon the annual performance review. They pointed out that it is not beneficial to the company to wait to perform annual evaluations because, as they see it, “rapid innovation is a source of competitive advantage,” which “means future needs are continually changing. Because organizations won’t necessarily want employees to keep doing the same things, it doesn’t make sense to hang on to a system that’s built mainly to assess and hold people accountable for past or current practices.”