Transforming the Value of Annual Performance Reviews

88% of organizations have formal annual performance evaluations, but far fewer organizations take other actions associated with an objective and instructive performance-management process, according to Brandon Hall Group research.

Percentage of Organizations That See Each Definition As Valid

Performance evaluations usually focus on the past, not on an employee’s potential, the Brandon Hall Group research shows, and most organizations say managers are not objective raters of employees’ performance or potential and do not consistently provide helpful feedback and coaching to their employees.

Only 32% of organizations believe there is a high correlation between the highest performance scores and the highest performing individuals. Combined with other weaknesses, this indicates annual performance evaluations have little or no business value.

  • How can we reduce the bias inherent in performance evaluations?
  • How can we get a better picture of an employee’s future value to the organization?
  • How can we reinvent performance evaluation so it has business value?

Despite the data above, there is no downside to an annual performance evaluation — if it is used to summarize ongoing performance conversations, feedback and coaching and is forward-looking.

The problem with the traditional evaluation is that it’s often the only report on performance during a year. In addition, most evaluations don’t address future goals and how performance affects employees’ career aspirations. Traditional reviews are also based on just a few milestones or specific projects that are not necessarily reflective of overall performance or potential.

An employee’s performance is dynamic. There are highs and lows, and strengths and development areas that must be addressed regularly during check-ins and coaching sessions. And though modern performance-management technology can document all conversations, goal updates, learning experiences and other elements of continuous performance development, an objective, fact-driven annual summary of all activity can be very helpful. But it shouldn’t be the sole or primary tool to judge an employee’s overall performance. It should be one piece in an ongoing series on interactions. Ideally, more people ought to be involved (peers, team members, etc.) than just the manager and the employee. Like any type of evaluation, the more data points available for analysis, the better.

The most important point, though, is that information should be used, not to judge what employees have done right or wrong, but what the performance says about their potential value to the organization going forward. The evaluation process –— including any formal year-end evaluation — should be used to answer questions such as:

  • What future roles does this employee have the potential to move into?
  • Would I promote this individual today if I had the opportunity?
  • How difficult would it be to replace this employee?
  • Do I consider this employee a key contributor to the team?
  • Would I give the highest salary increase and/or bonus to this individual?

Brandon Hall Group Strategy Briefs answer the critical questions learning, talent, HR and business leaders must address to manage their human capital. To tackle these critical questions in more detail, we built tools, frameworks, research summaries and business builders based on up-to-date research and case studies for you to implement best and next Human Capital Management (HCM) practices. To gain access to these valuable resources, contact [email protected].

Leading minds in HCM choose Brandon Hall Group to help them build future-proof employee-development plans for the new era. For more than 27 years, we have empowered, recognized and certified excellence in organizations around the world, influencing the development of over 10,000,000 associates and executives.

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Mike Cooke



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Mike Cooke

Chief Executive Officer of Brandon Hall Group Mike Cooke Prior to joining Brandon Hall Group, Mike Cooke was the Chief Executive Officer and co-founder of AC Growth. Mike held leadership and executive positions for the majority of his career, at which he was responsible for steering sales and marketing teams to drive results and profitability. His background includes more than 15 years of experience in sales, marketing, management, and operations in the research, consulting, software and technology industries. Mike has extensive experience in sales, marketing and management having worked for several early high-growth emerging businesses and has implemented technology systems to support various critical sales, finance, marketing and client service functions. He is especially skilled in organizing the sales and service strategy to fully support a company’s growth strategy. The concept of growth was an absolute to Mike and a motivator in starting AC Growth, in order to help organizations achieve research driven results. Most recently, Mike was the VP and General Manager of Field Operations at Bersin & Associates, a global analyst and consulting services firm focused on all areas of enterprise learning, talent management and talent acquisition. Tasked with leading the company’s global expansion, Mike led all sales operations worldwide. During Mike’s tenure, the company has grown into a multi-national firm, conducting business in over 45 countries with over 4,500 multi-national organizations. Mike started his career at MicroVideo Learning Systems in 1992, eventually holding a senior management position and leading all corporate sales before founding Dynamic Minds. Mike was CEO and Co-Founder of Dynamic Minds, a custom developer of software programs, working with clients like Goldman Sachs, Prentice Hall, McGraw Hill and Merrill Lynch. Also, Mike worked for Oddcast, a leading provider of customer experience and marketing solutions, where he held a senior management position leading the company into new markets across various industries. Mike also serves on the Advisory Board for Carbon Solutions America, an independent sustainability consulting and carbon management firm that specializes in the design and implementation of greenhouse reduction and sustainability plans as well as managing the generation of carbon and renewal energy and energy efficiency credits. Mike attended University of Phoenix, studying Business Administration and Finance. He has also completed executive training at the Chicago Graduate School of Business in Chicago, IL.