Dive Brief:
- Yearly performance reviews have been falling out of favor as of late – and it turns out they may be bad for employee’s mental health.
- According to research from the Neuroleadership Institute, “the very act of giving employees a rating jolts them into a ‘fight or flight’ scenario” that makes employees feel disregarded and undermined. They’d then feel inclined to ignore or reject the feedback and push back against stretch goals, the Wall Street Journal reported.
- Additionally, a yearly rating often blindsides employees, directly affecting their performance. Many expect a higher rating than they receive, leading to a steep drop in engagement. About half of all workers are surprised at their rating and 90% of those workers are unhappy, leading to a 23% drop in engagement in those workers, the Journal reported.
Dive Insight:
One issue that came up again and again is that yearly graded performance sends a “strong signal” to employees that their performance is based on innate abilities which “cannot be improved,” the Journal reported.
Big name companies have been dropping their yearly performance review systems left and right. GE dropped their legacy review system in favor of an app-driven system. Cigna also jettisoned their performance-rating system this year, the Journal reported, instead encouraging frequent conversations between managers and staffers aimed at helping employees climb their career ladder. Microsoft and Gap have also made reforms.
But switching from a traditional ranking system is no easy feat. Some experts are concerned about subjectivity and bias in the newer systems. Others worry that employers will still utilize some form of “shadow rankings,” the Journal reports.
