Annual performance reviews are costly, exhausting, and mostly futile. Only 12% HR leaders deem the process “highly effective” in driving business value. Only 6% think it’s worth the time it takes.
What business leaders have learned, very painfully, is that individuals cannot be reduced by numbers.
“Not everything that can be counted counts, and not everything that counts can be counted.” – Albert Einstein
Alternative to annual reviews is continuous performance management. It is implemented with an instrument called CFRs, for:
- Conversation: an authentic, richly textured exchange between manager and contributor, aimed at driving performance
- Feedback: bidirectional or networked communication among peers to evaluate progress and guide future improvement
- Recognition: expressions of appreciation to deserving individuals for contributions of all sizes
| Annual Performance Management | Continuous Performance Management |
| Annual Feedback | Continuous feedback |
| Tied to compensation | Decoupled from compensation |
| Directing/autocratic | Coaching/democratic |
| Outcome focused | Process focused |
| Weakness based | Strength based |
| Prone to bias | Fact driven |
