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Are annual performance reviews passé?

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Screen shot of Rypple on iPhone

Although tight ties between performance and feedback are important, the two are often separated by the realities of organizational life. “Annual reviews rely on hazy recall, with managers remembering recent events and overlooking what was done earlier in a review cycle,” says Stanford Professor and organizational expert, Jeff Pfeffer.

Similarly, though with more colorful language, past CEO of Yahoo [s YHOO], Carol Bartz says,

I have the puppy theory. When the puppy pees on the carpet, you say something right then because you don’t say six months later, “Remember that day, January 12th, when you peed on the carpet?” That doesn’t make any sense. “This is what’s on my mind. This is quick feedback.” And then I’m on to the next thing.

Our product life cycles are getting shorter and shorter — putting more pressure on how quickly we can form teams and work effectively in and across teams. At the same time, team members are often working apart or on-the-go. In order to give effective feedback in this environment, managers need support, and performance management platforms, such as Rypple, aim to help.

In the most adept teams, members know who knows what, who needs what information, and how to coordinate as a result. Rypple’s mobile capabilities mean that feedback can be given and received in ways that parallel the stream of daily work.

Rypple also helps make goal setting a living process, rather than an annual consideration. After an individual or team goal is set, other people can be invited to track the goal. Progress can also be monitored publicly, adding further accountability.

When I talked with Daniel Debow, co-founder and co-CEO of Rypple, he said that Rypple replicates common online behavior. People regularly check spaces like Facebook to update their activities and see what others are saying. Rypple “harnessed what was already happening,” he said.

Rypple supports “a desire to do what we already know is common sense,” Debow said. He also noted that managers should coach people every week or two, update goals, and recognize performance immediately.

In the weeks since the call, I’ve noticed additional cases highlighting the wisdom of speeding-up and socializing feedback.

For example, I went back to reports that Zappos had done away with annual performance reviews. In a presentation on their membership-required ZapposInsights site, they say that they found annual reviews unproductive. “Nobody wants to give them or receive them…If everyone is always in open communication, then annual reviews are redundant and not very useful at all.” Zappos does use a culture assessment as a feedback tool, but they are careful to say that this is not a substitute for annual performance reviews. Given the company’s open communication style, annual reviews just don’t have a place.

“A recession is a good time for managers to focus more on evidence and less on received wisdom or old habits. Asking hard questions about performance management would be a good place to start,” says Jeff Pfeffer. In my opinion, we have an opportunity to improve performance management in modern organizations. The people are ready. The technology is ready. Our organizations should be ready.

Image of Rypple Flow on a widescreen

4 Responses to “Are annual performance reviews passé?”

  1. Terri, I could not agree more with the quote “annual reviews rely on hazy recall.” If we allow online social collaboration in all other aspects of our lives, why not implement it to be more productive and integrated at work?

  2. Andrew Staples

    Comparing your employees to puppies who pee on the carpet doesn’t make Carol sound like someone appealing to work for. That comment makes me question her future at….oh wait, never mind.