How to Give an Annual Performance Review (If You Must)

Businesswoman sitting in meeting
Photograph by Robert Daly — Getty Images/Caiaimage

Dear Annie: I just had to give year-end performance evaluations to each of my 16 team members, and I feel like the whole exercise was a total waste of time. That’s partly because I was unexpectedly promoted into this team-leadership job in August, from a different part of the company, and my predecessor didn’t keep any written notes, so my data about what people were doing for most of the year are pretty hazy. But beyond that, I just don’t feel like our discussions produced anything useful. Our department’s 2016 numbers are looking great, and we’ve had very little employee turnover this year, so I’m assuming people are fairly happy in their jobs. So what is there to say besides, “Keep up the good work”? As you’ve probably guessed, my company doesn’t offer any formal training in this area. Any thoughts? —Just Jean

Dear J.J.: You’re far from alone in thinking annual employee evaluations are a waste of time, but there are ways to make these conversations worthwhile.

First, a bit of context: Research has suggested for years that yearly evaluations don’t affect performance much, if at all—perhaps in part because they tend to reflect the biases of the reviewer more than anyone’s actual job performance, especially when it comes to how women are rated. No wonder, then, that lots of companies, including IBM, Adobe, and Microsoft, have overhauled their performance-appraisal systems, ditching one-a-year employee evaluations in favor of continuous feedback in real time.

Still, according to compensation consultants Willis Towers Watson, only about 10% of the 2,004 companies (441 in the U.S.) in its 2016 Global Talent Management and Rewards Survey have either abandoned annual reviews or plan to do so in the next 12 months. That’s despite the fact that only 63% of these employers think yearly evaluations do anyone any good.

Employees tend to share that dim view. About half of the 3,105 U.S. employees in the study think that these discussions are, as you put it, “a total waste of time.” Consider: Just 54% believe their performance was accurately evaluated in their most recent review, and even fewer (45%) say a performance evaluation has helped them get better at their jobs.

“Employees are increasingly frustrated,” notes Ravin Jesuthasan, managing director of talent management at Willis Towers Watson, adding that the star talent you most want to keep may be the least satisfied of all: The study found that only 51% of employees believe “people are held accountable for their individual performance.”

Subscribe to Power Sheet, Fortune’s leadership newsletter.

So where does that leave you? Happily, the research also shows that, among employees who do believe they have benefited from an annual review, by far the biggest reason was that their boss had the “necessary skills” to do it right. Jesuthasan isn’t surprised, by the way, that your company hasn’t trained you in those skills. “Most employers don’t,” he says, “because they think it’s easy and that ‘anyone can do it.’” If only.

Jesuthasan has these three suggestions for you, and for anyone else who wants to make an annual evaluation more productive:

See yourself as a coach.

If you see your role in the appraisal as what Jesuthasan calls “judge and jury,” you’re less likely to get to the reasons why someone’s performance isn’t as great as it could be. “Managers too often focus on the end result of what an employee has produced, whether it’s $X in sales or Y number of widgets,” he observes. “But rather than looking exclusively at the output, look more closely at the input—the day-to-day details of the work itself and the person doing it.”

Particularly since you were brought in from another part of the company, so that you may not be as familiar with the people and processes here, “don’t just assess each team member’s final product,” he suggests. “Good leaders troubleshoot continuously. It’s time-consuming, but 10 or 12 short conversations a year always have much more impact, on the organization and the person, than one session at the end.”

Ask questions. Lots of questions.

It’s tempting in an evaluation to do most of the talking, but carve out enough time in your schedule so each team member can talk, too. You need to hear not only how he or she thinks the work is going right now, including any hurdles you might be able to help clear away, but also how this job fits in with a particular team member’s long-term career plan. “Do you know what this person has done so far, and what their strengths and weaknesses are? Is his or her current job using those strengths?,” asks Jesuthasan. “Has his career reached a plateau? Is there a logical next move you can talk about?”

A two-way discussion achieves two things. First, says Jesuthasan, “Asking an employee how she thinks the year went provides a perspective you really can’t get any other way.” It may surprise you. And second, holding on to millennial talent in particular often means showing young workers that you’re thinking about their future with your company.

Tell how her work fits with the company’s goals.

Even if it seems obvious to you how a person’s job relates to the larger organization, it’s not necessarily clear to employees, so spell it out. This is also a chance to talk about your team’s goals for the coming year, and what you need team members to do toward getting there. “We all want to be better at our jobs,” observes Jesuthasan. “People need to know about their strengths and shortcomings, but also, how do I navigate the organization? Managers are often too busy or distracted to give people the information they really need to see the larger picture.”

While you’re at it, you might want to make sure team members understand what their evaluations are based on, including what exactly is being measured, and how improvements in performance are noted (assuming they are). Convey that clearly, and you’ll be ahead of the game. Only 54% of employees in the Willis Towers Watson survey told researchers that their companies do “a good job explaining the performance management process.”

Good luck!

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board