Evaluation of employee performance has frequently been likened to budget preparation in that both are annual tasks that seem to come around far more frequently than once per year. Some managers' discomfort with performance review and budgeting is probably owing to two causes: these activities aren't encountered often enough for managers to become completely comfortable with them, and arising periodically as they do these demands on managers are often seen as intrusions on their regular work routine.
Depending on how they are timed, performance reviews may constitute more or less of an intrusion than budgeting. There are two common approaches to accomplishing annual performance reviews: all employees may be evaluated at the same time, with the "same time" usually meaning a span of two, three, or four weeks; or employees are evaluated on or near their employment anniversary dates. Each approach has advantages and disadvantages.
All at once
Some managers have reported that completing all reviews during one relatively brief time period improves consistency in the application of evaluation criteria. The reasoning behind this suggests that re-familiarizing with the criteria at one specific point in time and then tackling all reviews while the knowledge is fresh supports the notion of consistency and results in a better quality of reviews than can be achieved by other means. Some managers, however, support the all-at-once approach simply because it gets all reviews accomplished in a short time and they don't have to be concerned with this less-than-favorite task for another 11 months or so.
The all-at-once approach is also supportive of management education in the use of the evaluation system; many firms that evaluate at one time of the year hold instructional or refresher classes in applying evaluation criteria just before reviews are to start.
Critics of simultaneous reviews often note that the task usually consumes a major amount of a manager's time and forces other important matters to be temporarily ignored. And it's often felt that the quality of reviews can diminish as the evaluator works through the group, a risk that becomes greater as the number of employees to be reviewed increases.
If the company operates a pay-for-performance system in which wage increases are determined by evaluation score, the persons making the financial decisions will usually be strongly in favor of completing all reviews at the same time. When all scores are tabulated and pay increase percentages are determined, a specific amount of money budgeted for pay increases can be accurately distributed right down to the penny. In a company where pay raises are merit-based and all granted at the same time of year, it's rare to encounter any review scheme other than all-at-once.
Many proponents of anniversary-date review contend that this approach distributes the evaluations more or less evenly throughout the year, thereby avoiding a workload crunch occurring within a brief period. There may also be some validity in the contention that the resulting evaluations are often fairer and of higher quality because they're not rushed.
Opponents of anniversary date evaluation often contend that the process requires constant monitoring by higher management and human resources rather than oversight by these bodies for only a few weeks. Under anniversary-date review, the evaluation task can never be considered "done" for any appreciable length of time. It's also sometimes felt that an evaluator's interpretation and application of review criteria may be subject to change over time.
There is also, again, consideration of whether there's a pay-for-performance system in place. If the anniversary-date review process feeds such a system, it becomes extremely difficult to distribute a budgeted amount for increases; when all scores are not known at the same time, attaching a certain percent increase to a particular level of score is little more than guesswork and it's easy to fall well under or go way over the budget target.
Whenever it occurs
Regardless of how they're scheduled, performance reviews should be completed faithfully for all employees at the appointed times. A manager should have an established relationship with each employee; simply meeting once each year for an evaluation interview is not sufficient. It's necessary to maintain an ongoing relationship with each employee and be available to discuss work performance whenever circumstances warrant. The manager who "saves up" performance issues, accumulating them for discussion at review time, is making a serious mistake.
Consider one of the principal benefits of a manager and employee enjoying an ongoing communicating relationship in which questions are answered as they asked and all problems and issues are addressed as they arise: When the manager and the employee know where they stand with each other at all times, the scheduled performance review becomes a mere formality.