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HR Best Practices – Performance Management

Focal Or Anniversary Performance Reviews: Which Is Better?

All employees ought to receive an annual performance review or performance appraisal in a timely manner. The sad fact is that too many workers do not. I, for one, have worked in an organization that was not so timely, and I can honestly say it affected my attitude, plus my willingness to go above and beyond during those many months that my review was late.

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Almost a third of our work force was in a similar situation last year, not getting any sort of formal review. I get it that preparing for and giving feedback is of the least favorite management responsibilities and something that makes going to the dentist sound better.

Factors to Consider for Performance Management

How can we improve the process, set deadlines and track the results? Organizations have two common options for the timing of those appraisals: employee anniversary date or all done at the same time. We’re going to discuss the pros and cons of both performance management methods.

Employee Anniversary Date

Organizations that follow best practices make sure new employees get a formal written review providing feedback on the first six months on the job. This lets the newly hired know where they stand, how they have fared so far, and how they are assimilating into the new culture. If the start out of the gate is rocky, it is all the more important to share what specifically needs to change to assure continuing the employment relationship. Six months later, the annual performance review is prepared and shared, and thereafter on or very near the employee’s anniversary date.

What Are the Pros for Employee Anniversary Date Performance Reviews?

- The good thing about this approach is it is logical and it spreads out the work of performance management throughout the year.
- Every one waits the same interval, regardless if it your first year of employment or tenth.
- This schedule can work well if you are exclusively comparing employees to well-established standards or criteria and never to other employees.
- It spreads out the responsibility, theoretically allowing more thoughtful time for each appraisal.
- It spreads the work load out in your human resources group, as well, avoiding a peak work load related to performance management.

What Are the Cons for Anniversary Date Performance Reviews?

- The bad part of reviews being spread throughout the year means the unpopular task is perpetually on a supervisor’s “to do” list.
- This system makes true apple-to-apple comparisons between employees nearly impossible.
- This system can be unfair to the employee whose review is early in the fiscal year, by the boss who wants to save money for the increases of others whose reviews are yet to come. It can also be unfair to the employee who’s review is late in the fiscal year if the budget has been used up or been slashed along the way. The same story plays out if the review happens during a slow quarter versus a more profitable one.
- An employee’s anniversary date may or may not have something in common with logical measurement periods for their position.
- This timing is more challenging for aligning an employee’s individual work goals with the department or organization’s fiscal year goals.
- This timing makes it harder to have the whole company on board if you want to make changes to your process, or even your forms, in a way that is fair to every one.
- It puts more responsibility on the supervisor to make the time to get the documentation completed, since there is no organization-wide push.

What Are the Pros for Employee Focal Reviews?

- Doing performance reviews all at the same time is called a focal review. The good thing about this is that the discomfort of the task is condensed.
- Another positive is that by doing them all together, it gives managers a greater opportunity to compare and contrast employees. On a 5-point scale, are all of your subordinates really 4s? What do your stats say? Doing all of your reviews together allows you to pull your results and see what the various contributions were. Pulling those facts on quantity and quality of work will keep your appraisals fair and decrease bias.
- With focal reviews, the entire organization has a common focus. This gets peer pressure working for you. It also helps reduce meeting time for a concentrated week or two as others are in the same boat and understand that performance management is the priority for the organization and for you at this time.
- It allows for a logical cascade of corporate goals to department goals to group goals to individual goals because the timing works together for this optimal alignment.
- It takes less human resources department energy over all and completion rates are higher than in organizations using anniversary dates.
- Focal reviews support a common pay adjustment date better. Does your organization have a cycle where there is a slower period of the year? This would be a great window for scheduling your focal review. Retailers would never schedule this process between Black Friday and the end of December.

What Are the Cons for Employee Focal Reviews?

- Focal reviews can be awkward for some employees in their first year, which might require a review prior to the manager or employee being ready. Realize this ahead of time and know you’ll need to conscientiously document those first few months.
- Focal reviews don’t work if you don’t have senior management support to make them the organization’s priority.
- Focal reviews can be tough on those supervisors who have an extremely large number of subordinates.

Switching Performance Management Methods from Anniversary Date Timing to Focal Review

If you have been in the minority 20 percent still using an anniversary date review and you now want to change to a focal review, you can do that with a year of planning and the always-needed communication plan. I strongly recommend developing a matrix for your managers to use during their transition year. Your basic formula is your wage adjustment for each person times the fraction of a year until the focal review month. See the chart below:

June July Aug Sept Oct Nov Dec Jan Feb Mar April Focal
11/12 10/12 9/12 8/12 7/12 6/12 5/12 4/12 3/12 2/12 1/12 100%


So if your increase for an employee in August would have been 2.5%, in the transition year it will be 2.5% times 9/12th from the chart. 2.5% x 9/12 = 0.01875. You can use that increase as is or round it to be consistent with your corporate culture.

Summary

Whether doing anniversary reviews or focal reviews, remember that supervisors should be reminded to regularly and routinely provide performance feedback. A sincere compliment with a “thank you” is more effective for satisfaction than your merit budget. Formalize that feedback for each employee at least once a year in writing to keep your employees motivated and engaged.

Regards,

Beverly N. Dance, MBA, SPHR-CA, CCP, CEBS
Principal, Dance Associates
Human Resources Consulting
dance@mba.berkeley.edu

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