Hello, Old Friend: Performance Reviews Make Their Comeback
When the pandemic hit in 2020 the business world turned topsy-turvy overnight.
In the earliest stages of the coronavirus crisis, safety and survival took center stage as businesses navigated through the treacherous waters of lockdowns and economic upheaval.
Normal activities such as going into the office, business travel, and routine touchstones such as the annual performance review went on hiatus as companies looked to lessen the stress for employees.
“For a lot of companies it seems like they were looking for things to take off of people's to-do lists during the real triage of the pandemic, so for workers it hardly seemed fair when people were in some cases putting in like 12-hour days at work from their kitchen table, also overseeing virtual school for their kids, and facing this real cascade of challenges, to also sit down and rank them on a five-point scale,” said Wall Street Journal’s Kathryn Dill on a recent WSJ podcast.
In the Wall Street Journal’s Sept. 18, 2022, article, “The Dreaded Performance Review Makes a Comeback”, Dill and Francesca Fontana say that “companies took an approach of benign neglect to monitor employee performance during Covid-19 – such as dropping formal evaluations and goal-setting conversations.”
In 2022 the “New Normal” is Looking Very Familiar
Some two-and-a-half years later, and for a fair number of employees their “new normal” is looking very familiar.
Many employees are making the pilgrimage back into the office, albeit some on hybrid work schedules, and some are recouping their coveted frequent flyer miles once again as business travel takes flight, with a full return predicted by mid-2026.
And the performance review or annual review for employees is making a comeback with many workers going through the process for the first time in several years as companies look to apprise their workforce in the face of a looming recession.
“Now, many businesses are paying renewed attention to worker performance as they forecast tough economic times ahead,” write Dill and Fontana. “The return of the performance review is likely to be greeted with dismay by many workers (not to mention the many managers who hate giving them).”
While the return of performance reviews has some employees anxious and adds some work to the plates of managers, the annual “sit down” can be a win-win for both employers and employees.
When done right, the annual performance review can provide valuable constructive feedback for your business, and help your employees grow in their careers.
Annual Reviews Resurfaced in 2021, Now Back in Force
For some employees, the annual review made a comeback last year, and the groundswell to performance reviews has continued into 2022.
“For many companies we saw them start to bring these back in 2021, really bring them back in force this year, and for a lot of them there's this urge to return to, quote-unquote, "normal",” said Dill on the podcast.
Why the return? Dill says that there are several reasons companies cite:
- Need to create growth and development for employees
- Making sure there was transparency regarding compensation and promotions
- Preparing for the possibility of a recession and workforce reductions
“Growth and development is something companies were eager to get back to,” says Neel Gandhi, a McKinsey & Co. partner who focuses on human resources and talent strategy, told the WSJ. “It’s their day-to-day business way of ensuring folks are working on the right things and delivering on goals they’ve set for themselves.”
Some Employees “Anxious” About Performance Review Return
For some employees the return of the annual performance review is about as welcome as that co-worker who insists on microwaving leftover seafood in the breakroom.
“There's of course anxiety, even if there's lots of innovation and changes in how these reviews are performed as years go on. There's always sort of a general sense of oh, man, it's time to go in and face the music,” said Dill.
Some employees, perhaps, had hoped that performance reviews were a thing of the past – like that thumb drive you used to stick in your laptop (hopefully, for the sake of your security team, you have stopped using these cyber-attack-friendly devices!).
“For some workers this may really feel like a slap in the face. They're looking at their employers saying I gave, and gave, and gave to get you through this. We're the ones that got you through, and I was able to do it without having to fill out a self-assessment and have a 30-minute conversation with my boss and receive a grade, so there may be a little bit of resentment there,” said Dill.
The reality, however, is that American productivity decreased 4.1 percent during the second quarter of 2022, while labor costs soared 10.2 percent during that same period, and for many companies, getting a grasp on performance is paramount to moving forward successfully.
Recession Proof? Performance Reviews Role in Layoffs
Now some employees worry that the return of the performance review is a set-up for future layoffs as companies prepare for a possible recession.
- Meta (Facebook’s parent company) managers were urged to identify and push out low performers
- Goldman Sachs is prepping to lay off hundreds of workers soon as part of the bank’s annual performance reviews
These are not the only two companies contemplating a reduction in staffing with Forbes reporting on Oct. 28, 2022, the following round-up:
- Zillow plans to let go about 5 percent of its nearly 5,800 employees
- Seagate Technology CEO estimated an 8 percent reduction of workforce
- Philips unveiled plans to lay off about 4,000 employees across the Netherlands and the U.S.
- Microsoft announced some more cuts just three months after announcing a 1 percent reduction in their workforce
- Beyond Meat announced that 19 percent of its workforce would be slashed
- Intel reportedly cut thousands of employees including roughly 20 percent of its sales and marketing departments.
Considering this news, the return of performance reviews has some employees on edge.
“There's a host of anxieties and concerns around performance evaluations for workers in any climate, but right now certainly there are whispers and shouts in some corners about fears around layoffs, and it's tough to keep that entirely out of the process,” said Dill on the podcast.
Game of Thrones fans will understand CarParts.com CEO David Meniane when he has been telling employees in recent weeks that “winter is coming” after implementing a mid-year review to go with the company’s end-of-the-year annual review.
“We’re asking everyone to raise the bar and raise the performance standards,” Meniane told the WSJ. “I don’t know if we’re in a recession or a transition, but I think the changes in the environment call for a new budget, new metrics, and making sure we’re all aligned.”