Annual Performance Review Predictions for 2017

By Michael Heller

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Performance management is one of the biggest discussions among HR professionals right now. Annual performance reviews are being debated on how to transform them into something that serves both managers and employees. Many companies are deciding to ditch the annual review process, while others are opting to keep this old-fashioned technique.

Only 8% of companies believe their current performance management process is highly effective in driving business value, while a shocking 58% say it’s not an effective use of time. This gives reason as to why many companies are looking to revamp their process, but what exactly can we predict to happen to annual performance reviews in 2017? Well, we give you three predictions:

Companies Opting Out Of Annual Performance Reviews.

There have been a plethora of companies who have decided to rid of annual performance reviews and implement more frequent feedback. For example, General Electric (GE) practiced annual performance reviews for decades, and were widely known for it. GE has recently chosen to go for a less regimented system and implemented more frequent feedback via an app. Since then, GE has experienced a five times increase in productivity.

Another example is the “Check-In” system Adobe created, where goals are set annually but feedback given regularly. Since implementing this process, Adobe has seen a 30% decrease in turnover and a 50% increase in involuntary departures.

How you can stay ahead based on these predictions? Only 19% of Millennials report receiving routine feedback from managers, and over 50% want feedback more often. Investing in performance management software that allows easy and accessible performance management will increase employee engagement, productivity and overall employee happiness. Disengaged employee are expensive, so don’t be the last one to invest in real-time feedback.

A Modest Increase In Compensation.

The expected compensation increase for the United States is estimated to be around 3.1%, up only 0.1% from the 2016 3.0% increase. Although a slight increase, surprisingly, the changes to the U.S. Fair Labor Standards Act effective December 1, 2016, do not appear to have an increase on salary budgets for next year.

What does this mean for annual performance reviews? While this pay increase is fairly modest, it’s still typical to expect a bargaining for compensation. However, 79% of employees would prefer new or additional benefits to a pay increase. Use this to your advantage and look to offer benefits you may not offer currently. As previously mentioned, performance management software is a benefit which provides a great ROI. Plus, employees want the feedback that comes along with the process.

Annual Performance Reviews Will Be For Big Decisions.

While many companies are getting rid of annual performance reviews, a lot are still keeping them for the ‘big decisions.’ What exactly does this mean? For example, Adobe is still choosing to set goals annually, but also implements regular feedback around those goals. This is becoming an increasingly popular avenue for companies to take, with the annual reviews becoming more for structural changes or big decisions.

Another example for this prediction is the outcome of the latest Samsung Note 7 crisis. Many Samsung employees are worried about their annual performance reviews because of the recent crisis they have been facing. Tension is surrounding Samsung employees in worries the annual performance reviews can bring about serious management changes.

What does this mean for your performance management process? While annual performance reviews may not mean bad news for everyone, they will start to be looked at a lot more seriously. Use this as an opportunity to keep your employees at ease with routine feedback to help steer clear of nervousness and anxiety of an annual performance review.

Frequent feedback on the rise, compensation increases and big decisions are just a few of the predictions we have for 2017 annual performance reviews. Whether or not your company is a part of these measures, it’s time to take a look at where your performance management process is now, and where it should be.

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