The annual performance review is a time-honored process in which management provides employees with assessments of their job performance throughout the preceding year. Originating during the Industrial Revolution, the formalized review process is now ingrained in the corporate structure. More than 90 percent of businesses say they continue to conduct annual reviews.
Most readily admit the process needs work. Increased automation and artificial intelligence (AI) can help streamline the process and make reviews far more functional than they are now.
In most organizations, the annual performance review has become a painful exercise that both managers and employees dread. Research shows that most employees feel that their performance reviews are inaccurate, and managers say firing an employee is the only thing they hate worse than doing performance reviews.
The process has become time-consuming and expensive and does not do much to motivate the workforce or improve performance. The Deloitte consulting firm famously revamped its review process a few years ago after discovering that it was spending nearly 2 million hours a year on employee evaluations. Deloitte, General Electric and Adobe are among the large enterprises that have shifted from annual reviews to an ongoing feedback system.
Performance Review Problems
Annual reviews have always been heavily dependent upon manual, paper-based processes. Managers fill out forms rating employees on a variety of criteria, employees fill out their own self-evaluation, the forms are submitted to HR, and then both sides sit down for a typically awkward face-to-face meeting. It just creates more work for everyone.
Manual processes are also likely to create inconsistencies due to a variety of human factors. Managers may, consciously or not, weigh an employee’s gender, race or age in the process. Fatigue can also be a factor — managers may become less exacting after a few dozen reviews.
Unconscious biases also commonly distort reviews. Managers tend to place most employees in the middle of the rating scale, compare employees to peers rather than to defined goals and requirements, and give more weight to recent events.
An AI-driven talent management system could make the annual review more palatable and rewarding for everyone involved. Chatbots and virtual digital assistants (VDAs) that leverage conversational AI can help automate many traditional paper-based processes, reducing the time constraints for all involved. They also make it easier to collect ongoing feedback while reducing many human elements that can lead to skewed evaluations.
The Value of AI-Driven Automation
Chatbots use algorithms to collect data, identify patterns and help HR produce metric-based evaluations. By enabling an ongoing evaluation process, they also ensure that employees are measured against their entire body of work and not just what they’ve done recently.
AI-powered talent management can also help HR look forward. With chatbots conducting frequent reviews that query employees about their interests and skills, organizations can more readily identify employees who are ready to take on new responsibilities. AI-powered systems can also conduct regular “heat checks” or “pulse surveys” — short, simple surveys sent out every few weeks to help gauge an employee’s attitude, workload and motivation.
Integration with an HR portal streamlines the process of rolling out these tools across all of a company’s offices and even employees who telework. The portal can also send out reminders to employees and managers, and serve as the central repository for evaluation data.
By enabling regular feedback unaffected by human biases, AI-powered talent management systems can reduce the time, cost and frustration of the annual review process. Equally important, they provide an opportunity to recognize achievement and advancement opportunities, which can help ensure a motivated and engaged workforce.
Written and composed by Lyndsay Soprano, Director of Marketing