Despite the hype, are organizations actually kicking performance reviews to the curb? Not really.

In The Truth & Lies of Performance Management, a new research report published by Box of Crayons, only eight percent of our survey participants reported that they had eliminated ratings, whereas the majority of others mentioned that ratings were de-emphasized but not eliminated.

While performance management tactics have evolved, the fact remains that a vast majority of companies continue to conduct the much-dreaded, yearly, traditional appraisals. But the effectiveness of these performance reviews is still murky.

The Problems with Annual Performance Reviews

Let's face it, most managers and their team members find that performance reviews are painful and time-consuming. Our research showed that in almost 75% of organizations, managers feel that the process is burdensome and offers little value.

That's likely because the reviews are few and far between and often too closely tied to salary expectations. And, to rub salt into the wound, the general consensus is that performance management reviews rarely improve employee development as they are backward-looking and frequently focused on the negative.

The Evolution of Performance Reviews

"Performance management" is one of those HR buzz phrases we've come to know. And for a long time, performance management went hand in hand with performance reviews and appraisals. By the 1940s, about 60 percent of American companies were using appraisals to track employees, notes the Timeline of Talent Management (Peter Cappelli and Anna Tavis, "The Performance Management Revolution," Harvard Business Review, October 2016).

Appraisals went from being all about accountability to being about development, only to return to accountability, and then — you guessed it — shifting back to development. Slowly, organizations are beginning to see the value in more informal, frequent feedback and coaching, rather than long-winded bureaucratic and formal discussions.

We Need More Than Annual Feedback

HR leaders are looking to support their managers in providing more moments of insight, more on-the-spot, effective coaching conversations that allow for increased learning and development. There are clear benefits to replacing the annual review with timely, ongoing feedback.

For one, managers can address small problems as they arise, well before they become big ones. It gives the manager a chance to address any employee bad habits, helping to shape employee behavior on the spot.

When done properly, this kind of instant review allows for better organization alignment and engagement. Coaching conversations offer more moments of accountability and allow you to check in on productivity while encouraging employees to stay focused on their goals and Great Work. They also maintain a more informal relationship between manager and employee and can ultimately help develop the employee's understanding of their role in the organization's success.

Where It All Goes Sideways

But the truth is, we're not making much progress on helping managers to be great at coaching. During the course of our research, with over 120 senior HR and L&D leaders, we found that, on average, 30% of managers are good at coaching and 32% are poor (leaving 38% somewhere in the middle).

HR organizations around the world understand the importance of coaching skills for managers and bring in programs to support this initiative. But these programs fail to stick.

Why? Quite often, subtle resistance and pushback from the managers. Managers' perception of coaching is tainted by the idea that manager coaching and executive coaching are one in the same. In the case of executive coaches, they are brought into the organization every couple of weeks for one-to-one sessions with leaders and high potentials. Sure, managers would love to have hour-long chats with their team members, but there's more work to do: Emails are pouring in, and did someone mention another meeting? Carving out additional time in a day is not a luxury any busy manager can afford with their team members. The "no time, no time" perception is cited by managers as the biggest barrier to why they don't coach.

How to Improve Performance Management & Employee Development

However, despite perception, not much time is needed at all to coach effectively. Research from the Scholastic Aptitude Test shows that an arithmetical increase in performance requires geometrical increases in time. In other words, you get the most value from a little bit of coaching, while spending further time on coaching adds some benefit, but not much.

At Box of Crayons, by training more than 70,000 managers in coaching skills, we know that focused, useful, coaching conversations can take place easily within a 10-minute space; in fact, we go so far as to say that any manager can coach in 10 minutes or less.

The trick is to equip managers with some essential tools to help them reduce their inner advice monster and, instead, stay curious for longer. Increasing your manager’s capacity to deliver in-the-moment feedback is probably one of the best investments an organization can make in performance management and employee development.

If managers can supplement yearly reviews with ongoing feedback, annual reviews won’t be quite so painful; poor behaviors are checked as they appear, and task and performance expectations are managed in multiple, short, effective conversations — rather than the dreaded once-a-year review.

Michael Bungay Stanier

Michael is the Senior Partner at Box of Crayons, a company that teaches 10-minute coaching so that busy managers can build stronger teams and get better results. His most recent book, The Coaching Habit, has sold a quarter of a million copies. Along with David Creelman and Anna Tavis, Michael recently conducted and released a new piece of research, The Truth & Lies of Performance Management. Visit Boxofcrayons.com/PMResearch for more information.