Call them performance appraisals, employee reviews, or annual evaluations … the truth is that most employees dread receiving them almost as much as managers hate giving them. That fact is, the performance management system in most organizations is broken.

Many managers have become adept at avoiding any type of positive or developmental feedback and even more disdain for the annual review. The truth is avoiding the performance review is like ignoring a leak in a boat. It will eventually sink you.

Quite a few managers also mistakenly see performance reviews as a time to praise employees for how great they are or to criticize them for what they’ve done wrong. Managers of the old school often believe no news is good news: “you’ll hear from me when I’m not happy.” But silence is not golden when managing today’s newest workforce entrants – Generation X and Generation Y, also called Millennials.

Single source evaluations, the traditional once-a-year performance review (if employees are lucky to get that), are not only dreaded but ineffective too. Studies consistently show that nearly every employee receives ratings higher than their actual performance using the single source evaluation.

Supervisors have motives – although not always in the best interest of the organization – to boost ratings. The three most common performance evaluation mistakes managers make are:

1. A belief that a higher rating might encourage the employee to perform better next time.

2. The employee has had a lot of personal problems during the last review period. He feels sorry for him and chooses to postpone dealing with the performance issues until a later time.

3. The department already has a number of vacancies. The supervisor doesn’t want the employee to get angry and quit. As a result, the employee receives a “halo” to keep him/her happy.

Another problem with single source reviews is turnover – both managers and employees. Unlike the past when employees enjoyed a career with the same company for decades and managers were organically promoted over time, employees today are mobile and managers are reassigned, promoted or terminated. More often than not, managers don’t work with the same employees long enough to get to know them and subsequently don’t have the knowledge or motivation to give fair performance appraisals.

The result is that mediocre, even poor, performance is tolerated and superior performance is ignored. Every employee then feels entitled to a pay raise and promotion as a reward for good performance.

The employee review still holds an important place in business. The process just needs to change and the focus must be on the feedback, not the management of paperwork and fulfilling an annual ritual that most people ignore once it is completed. 

Click here to learn about a better alternative for employee performance feedback.