7 Mistakes Managers Make When Giving Annual Performance Reviews

It's that time of year again: the annual performance review.

This can be a stressful time for both HR managers and employees. This means a lot of preparation work for HR managers. And it's pretty nerve-wracking for employees to talk about their performance.

Although it's not always easy, feedback and career conversations are crucial for growth. But should they only happen once a year? By the end of this article, you should have a better idea of what type of appraisal cycle is best for your company - and clear ways to achieve it.

Top 7 annual performance review mistakes

If you only do a performance review once a year, there's a lot of pressure to get it right. Most HR experts today recommend regular, constructive feedback sessions. Large companies like GE, Adobe, Accenture, and Netflix have recognized the problems with annual performance reviews and eliminated them altogether.

But we'll leave it up to you to decide what's best for your business. Whether you need a guide to improving your current process or you're opting for a complete overhaul, here are seven performance review mistakes you should know about.

1.Make no effort
The most common mistake employers make during performance reviews is inadequate preparation.

Often performance review preparation is secondary to other, more “important” tasks - a quick task to be completed between meetings.

Sometimes managers are simply unaware of the importance of performance appraisals, and inadequate preparation is a symptom of inadequate appraiser training. Or they are aware of the importance, but believe they can get by with little effort.

But the thing is: HR managers set the precedent for improvement. If they don't bother to check their team, their team won't bother to improve.

This is why we recommend frequent performance reviews with your team members: it's much easier! It requires much less preparation because you don't have to dig through documents to remember work from 11 months ago. You don't have to worry about a lack of specificity or irrelevant feedback. Instead, you can hold a quick meeting about recent work - and set short, actionable goals for the coming months.

2. Falling for the recency effect
As mentioned earlier, another annual performance review mistake is relying only on recent work. This happens often because we are human - and recent events are what we remember best. This is called the recency effect.

Try this quick experiment to see what we mean:

Have someone recite a list of 10-15 words to you. Which words do you remember?
Make sure that the last group of words you heard stick in your mind the most.
Make sure that the first group of words presented to you stands out to you more than the words in the middle (this is called the primacy effect).
While it's natural to fall for the recency effect, it's not exactly fair to your employees. As a hiring manager, you should take note of your team's performance throughout the year to prepare your annual reviews. Or you should conduct regular feedback sessions - perhaps once a month or quarter.

Imagine only seeing the beginning and end of a movie. You might get an overview of what's happening, but you would have missed the entire plot. So how can you properly evaluate it?

Many say this is why performance reviews don't work. A lot can happen in 12 months, so it's easy to overlook big achievements.

3. Focus exclusively on the negative
As the saying goes, people have a habit of becoming what they are encouraged to be, not what they are admonished to be.

Performance appraisals should motivate your employees just as much as they provide constructive criticism. Ignoring benefits and contributions is a quick way to demotivate your employees. But the same applies here: Don't just give a compliment for the sake of a compliment.

A tip for meaningful positive feedback? Avoid empty compliments. Here's what you shouldn't say in a performance review:

“Overall, you’re doing well.”
“I like the work you did on this project”.
“You are an asset to the team.”
“We appreciate everything you do.”
Instead, qualify your statements. Use specific examples of employee feedback:

“I really like how you solved problem X in your last project. That shows great leadership qualities.”
“Your idea to add ‘X’ to the project really made it a success. They made a great creative contribution.”
“I noticed that you worked overtime during our production period and I want to tell you that we really appreciate it. Your commitment means a lot to us.”
Since our brains are trained to respond to negative feedback, you should make sure that the positive feedback you give carries enough weight. This clarity will also help reinforce desired behaviors. There are also ways to give negative feedback without demotivating your employees.

4. Involve the wrong people
Another common performance evaluation mistake is including the wrong people.

A senior manager may see their employees' work remotely, but they have no visibility into their daily performance. And they probably don't document performance throughout the year either.

In order to give a fair evaluation, each work must be acknowledged.

You wouldn't ask a film critic to rate a film for which he has only seen the trailer. So how can a supervisor or manager evaluate an employee with whom they have so little daily contact?

The employee will also feel like they have been evaluated fairly if the evaluation is conducted by a manager who works closely with them. And that's incredibly important to keep them engaged and motivated to do their best.

5. Surprise your employees
Performance reviews shouldn’t be a surprise to your team. It is important to let them know when they will take place and what they will cover.

That is the reason why:

This way you can mentally prepare yourself for an important conversation.
It gives them time to prepare notes and evidence for their work.
It shows that you take time to prepare and value their contributions and growth.
Inviting people to a meeting is also a good opportunity to set the tone and invite collaboration. Here's an example:

I look forward to speaking with you privately about your year. I'll prepare some notes, but most of all I'd love to hear what you have to say!

Failing to consider employee input could be a bad start. If you ensure that the invitation to a meeting is a collaborative, inclusive process, you will create a positive tone for the upcoming conversation.

6. Link salary increases to performance reviews
Tying salary increases to performance reviews is a common mistake employers make during performance reviews. However, this can be damaging to your company's culture. This is well explained in this article:

“Performance reviews tied to compensation create a blame-oriented culture. It is well known that they reinforce hierarchies, undermine collegiality, hinder collaborative problem-solving, discourage direct conversation and are all too easily politicized. They are self-destructive and demoralizing for everyone involved.”

By linking the review to the remuneration, the actual purpose of the review is pushed into the background and it is only about money.

Ultimately, an appraisal is about the employee's performance, not his salary. However, with this approach, the employee is likely to focus on whether or not they will receive a raise - rather than on how they can add more value to the company.

7. Skip a review altogether
Another problem with annual performance reviews? Sometimes they don't happen at all. And failing to discuss career goals is the biggest mistake of all. But unfortunately this happens quite often.

When your performance reviews happen annually, HR managers are under a lot of pressure to get them done and done right. If you move to frequent one-on-one meetings, the entire process will be less overwhelming - for both parties.

In this article, Russ Laraway, human resources manager and author, explains these benefits:

Career conversations - deep, meaningful dialogues coupled with action plans for measurable goals - go a long way in retaining [employees] longer.

-Russ Laraway-

The idea is to keep communication regular. Not once a year. And above all, not never.

Why performance reviews don't work
Work can be busy - and sometimes it feels like you're always one step behind - but feedback needs to be regular. It is the heart of the workplace.

What takes place in these sessions is connection and communication. Two values that all organizations undoubtedly need to be successful.

You might be thinking:

“There is nothing important to discuss with them at the moment. They are fine."
“There's too much going on. We need to focus on getting the work done.
“My employees know that I have an open door policy, if they want to talk they can come to me.
But being a good manager also means encouraging these conversations on a regular basis, even if there is nothing “big” to discuss.

Whether it's discussing challenges, offering praise for a job well done, or just checking in on how things went, take the time to make your employees feel seen, heard, supported and valued .

The essentials in brief
• Be well prepared for the performance appraisal of your employees
• Give balanced reviews, not just reviews of recent work
• Offer recognition and praise in addition to constructive feedback.
• Don't forget to look forward and focus on new goals for the coming year.
• Let your employees know when the appraisals will take place and how they can prepare for them.
• Choose the right manager to conduct the performance review
• Avoid linking raises and promotions to performance reviews
• Prioritize performance reviews - don't skip them!
• Annual assessments should be supplemented by regular feedback discussions.

While it's important to avoid these common mistakes employers make during performance reviews, we recommend a more modern approach: regular 1:1 feedback and career conversations with your team members. As you develop these habits, you and your team will feel more comfortable - and excited as you explore the next steps in their development and contribution to the company.

Now we have to ask you: What do you think about annual performance reviews? Tips by IceHrm.