Whether your company conducts performance reviews annually, biannually, quarterly or through other means, such as 360-degree feedback and through engagements surveys, each has its pros and cons. And as each business has its unique needs, there is no "right" performance review structure, though I have my favorites.
Annual
Performance reviews are typically once-a-year reviews where managers meet with their employees to discuss performance, highlight areas for improvement and plan for the upcoming year. While I have no problems with the agenda of such a meeting, I do take issue with the frequency.
Have you ever made a New Year’s resolution – "I’ll go to the gym five days a week" – only for your resolve to fade in the second week? Just like your priorities change, so, too, do those of a business. For this reason, the annual review has become a relic, reminiscent of old-school HR processes.
Aside from the infrequency of the meetings being wholly impractical from a business perspective, their infrequency also places great pressure on both sides: Managers and employees have an entire year's worth of performance to discuss in one short meeting. In addition, unless your manager is highly organized and has kept detailed notes on each employee and their performance throughout the year, it becomes very difficult to recall things from ten or eleven months ago. The annual review has become outdated and with good reason.
Biannual
As the name suggests, biannual reviews are held twice per year. They follow much of the same procedure as annual reviews: They are meetings between managers and their employees to discuss performance, highlight areas for improvement and plan goals for the next six months. They have largely the same pitfalls as the annual review, as their effectiveness is marred by their infrequency. However, I still prefer and recommend a biannual review cycle over an annual one.
Quarterly
Quarterly reviews are held four times per year. They, too, follow a similar format to the annual and biannual review. For most contemporary companies, quarterly is the optimal frequency with which to hold employee performance reviews.
They are frequent enough so incidents are more easy to recall, as less time has passed since the last review period (compared to annual or biannual reviews) but aren't so frequent as to become burdensome. Additionally, most business work in terms of quarters. Therefore, having your review period on the same quarterly schedule can be advantageous as goals and objectives can be more closely aligned with those of the business. They enable easier evaluation of company goals and can easily be reset as company goals and priorities change.
360-degree feedback
This type of feedback is perhaps the jewel in the feedback crown. It provides feedback and input from those all around you. Instead of the traditional model where an employee is evaluated by their manager, 360-degree feedback combines feedback from peers, managers and those who report to you.
By receiving feedback from managers, co-workers and colleagues, employees receive a more rounded view of their performance, skills and competencies. Crucially, peer feedback can very often be the most valuable as they are the people who know you best. Colleagues work alongside you daily, collaborating on projects. Therefore, they are perhaps the best positioned to provide you with accurate feedback.
In a sense, the feedback can be viewed as more valid and objective as it is from such a varied, diverse audience. And because of this, it provides a unique opportunity to uncover areas that may need development or expose gaps in knowledge that could be valuable. Such feedback can then be incorporated into employee improvement or development plans.
Engagement survey
Happy employees produce better work, are more engaged with the company and its objectives, and also are more likely to stick around. It's no surprise that companies with the highest rates of employee engagement, like Google, also have similarly high rates of employee retention.
There are no standard drivers of engagement; however, some commonly assessed factors include advancement, recognition, pay and benefits, job role, training and development opportunities, leadership, work environment, etc. When employees are engaged, it opens a channel of communication between them and management, and they can provide feedback that can be valuable to the organization. Further, the inclusion of employees in day-to-day aspects of the company's operations makes employees feel valued – that not only are they listened to, but their opinions are valued, too.
Where to now?
While each of the above performance review styles, strategies and frequencies have inherent advantages and disadvantages, none on their own can adequately measure employee performance, engagement and general job satisfaction.
Instead, I advocate for a process whereby two or more of these frequences and styles are combined. For example, combining quarterly or biannual reviews with 360-degree feedback can help employees remain engaged, and, by default, you begin to foster a culture of continuous learning and development within your company. Further, your review cycle is shorter, as you hold performance management meetings more frequently and, therefore, these meetings are easier to prepare for (plus they are more timely).
Implementing 360-degree feedback systems can help your business more effectively encourage in-office communications and cultivate a culture of open employee feedback. Contemporary 360-degree software solutions can increase the amount of feedback your employees provide, plus they can be anonymous, which allows employees to provide open, honest feedback.
Another bonus of using 360-degree software is that regular check-ins make employee performance reviews a much less daunting task for managers as the information is clearly and readily available via automatically generated reports as provided by your software solution.