Developing an Annual Review Process for Your Firm

Developing an Annual Review Process for Your Firm

7.5 MIN READ 

It’s that time of year again, and I don’t mean fall—it’s that wonderful time of the year when many organizations begin their annual review process! Does your team have an annual review process? Should your team have one? Let’s explore the pros and cons of developing an annual review process for your firm.

In recent years, the traditional annual review process has come under attack as being an antiquated and ineffectual method for rewarding or punishing employee performance as documented throughout the year. Managers and employees alike dread the awkward conversations that will determine a team member’s potential for raises or promotions after dragging up twelve months’ worth of work history.

The effect on team performance is often negligible or downright demoralizing. Why ruin team morale and create an atmosphere of competition between team members if it is unlikely to encourage a happier, higher-performing team? Is there a better way?

For many organizations, the answer is “yes!”

The key is avoiding the pitfalls and pain points that many traditional review processes unwittingly incorporate. Most of the negative connotations that annual review processes conjure up are related to a focus on ranking employees or providing negative feedback about employees’ mistakes or areas of needed improvement.

But an annual review process can (and should!) be a valuable addition to your team’s personnel management philosophy when it is structured in such a way that allows employees to celebrate their wins from the previous year and make a plan for their individual development goals going forward.

Let’s break this idea down into steps.

What should an annual review process include? Ideally, the annual review process should offer a chance for the team to look back and identify and celebrate wins and the opportunity for individual team members to think about their professional development goals and make a plan to move toward those goals.

To maximize the effectiveness of your annual review, the process should be largely driven by the employees and allow them to personalize the process with adequate time for self-reflection and goal setting.

Throughout the year, team members should be coached to track their successes in anticipation of the annual review. Not only does this streamline the process of gathering information at the end of the year, but it also provides team members with a growing document that visibly demonstrates their contributions to the team and growing competency. This can be particularly useful in supporting highly driven team members' need for concrete accomplishments to achieve job satisfaction.

There are a couple of caveats. An annual review process is not a substitute for timely, focused feedback throughout the year. If you are saving all of your notes on your team’s performance, both good and bad, for a once-a-year review, you are losing the benefit of providing feedback in the first place. Team members can’t use what they don’t know! If you don’t provide feedback to your team throughout the year with targeted praise and specific areas that need improvement, you can’t expect your team to act on those suggestions. Timeliness affects both behavior changes and team morale. In addition to the inability to utilize the feedback to make corrections, team members often feel blindsided when feedback is withheld for extended periods of time and then administered in an accumulated catalog at the end of the year.

Here at XY Planning Network, our team has implemented a two pronged approach to the annual review process: an end-of-year review of each team member's wins, the “Snapshot”, and a “Career Action Plan,” which is a plan for each individual's development moving forward.

The Snapshot focuses on the year in review as marked by the team member’s personal and professional achievements, victories, and challenges overcome to create a “brag sheet.” Each team member completes their own Snapshot document, giving them an opportunity for self-reflection and a chance to evaluate their progress throughout the year. The wins are sorted into categories based on XYPN’s core values, which ties each individual’s accomplishments back to the company’s mission and objectives. The Snapshot exemplifies our core value of Get Sh*t Done. Our other core value categories include:

  • Be Well Being You. This value covers personal endeavors, individual development achievements, wellness, fitness, work-life balance, and giving back.
  • Win Together, Lose Together. Here team members share their wins and victories that helped the team succeed or ways they made life better for their teammates.
  • Mission Driven. XYPN's mission is supporting the amazing network of advisers that our team is privileged to work with daily. No list of wins would be complete without a place to document those triumphs that support that mission!
  • Do the Right Thing. We have a special place of honor for team members who have had to make tough decisions or face uncomfortable challenges in their roles while maintaining their integrity. This is the spot for acknowledging those difficult moments that are essential for our continued success.

Once the Snapshot document is complete, the team member will meet with their direct manager in a one-on-one meeting to review the document and acknowledge all of the contributions the individual has made to the team.

Taking the time at the end of the year to celebrate individual and team wins is a great way to set team members up for success and get them in the right mindset to begin planning for their personal and professional development in the upcoming year, which leads us into the next step.

The second piece, the Career Action Plan, is future-focused. The Career Action Plan is designed to encourage team members to think about where they want to be and what they would like to be doing in the future and to create a clearly defined roadmap to help them achieve those goals.

The Career Action Plan asks team members to start by picturing where they would like to be in five years. This is the big picture. If it seems too challenging to look that far ahead, start by looking back over the last five to ten years and asking yourself these questions:

  • What has your path looked like up until this point?
  • What parts did you enjoy?
  • What parts did you dislike?
  • When did you feel like you were succeeding?
  • When did you feel like you were struggling?
  • What does success look like to you?
  • What do you need to keep from becoming bored?
  • What do you want to do that you aren’t currently doing?

After the team member has established their five-year goal, they are taken through the steps of breaking the big picture down into actionable items. Now that they know where they would like to go, we need to determine exactly where they are currently at in regard to their long-term objective. Team members are asked to self-assess the top strengths that will aid them in moving toward their goal, as well as the primary areas of development they will need to succeed.

Team members should view this not as an opportunity for calling out their weaknesses, but rather identifying the experience or training that they have not yet accumulated through their path up until now.

Next, team members are asked to picture the halfway point to their goal. Where do you need to be in two to three years to be on track to accomplish your big-picture goal? What specific goals do you want to have achieved at this point in your progress? What deadlines will you set for each of those goals? What strengths will you have that will support you in achieving those goals? What development needs are required to achieve those goals?

With the midpoint in view, team members are then asked to make a one-year plan. How do you plan to get started? What are one to three things that you can do in the next year to move forward? What training or opportunities do you need to further your development objectives?

Goals set in both the mid-term and short-term plans should be SMART goals—Specific, Measurable, Attainable, Realistic, and Timely—and should complement the organization’s mission, vision, and goals.

We also ask teammates to set at least one personal goal for the year. The personal goal should be something that fits with our core value of "Be Well Being You." Whether that goal is running a marathon, adopting a puppy, going on a long vacation, or spending more quality time with family or friends, it's equally important for the team to know they have support pursuing their life-enriching activities in addition to their professional development.

After the individual completion portion has been finished, the team member will have a one-on-one review and planning session with their manager. The planning session should be used to check the feasibility and completeness of the plan. While managers should not discourage team members by implying that a big picture goal is unattainable, it is reasonable to assess the timeline provided and rearrange the deadlines for goals to better support the team member’s individual development needs.

The most critical function of the Career Action Plan requires more than a one and done approach. For team members maintain momentum in pursuing their plan of action, accountability from leadership is essential. We recommend that managers review each team member's plan, with a specific focus on the one-year goals, at least once every quarter.

The Career Action Plan is not a static document, and it should remain in an editable format that can be easily updated as the team member's plans and goals are refined and adjusted.

Each organization is unique. What works for our team may not be the best approach for yours. Here are some ideas to consider when building your own tailored annual review program:

  • What is the goal of your annual review program? Is increasing morale the primary objective? Are you seeking to ensure that team members receive acknowledgment for their victories? Are you hoping to improve performance? Do you need a more structured system to ensure team members have access to ongoing development resources?
  • How is your team structured? Are the team members primarily remote? How does the team communicate most effectively? Are in-person meetings practical, or will video calls need to suffice?
  • What are the key performance indicators or core values that you want your team to espouse? How in-tune is your team with your organization’s mission and core objectives?
  • How are you currently soliciting feedback from and delivering feedback to your team? How is the feedback being tracked?
  • What development resources does your team have available? How knowledgeable are your team members about the availability of ongoing development? How familiar is your leadership team with your team member’s individual development objectives and paths?
  • When are your team’s peak workload periods? Is there a preferred time of year to conduct the review when the additional time needed to fully participate in the process would be less burdensome?

Regardless of how you execute your annual review process, the benefit of having a clear, consistent, and recordable system for acknowledging your team's influence on your organization's progress and providing them with a transparent and supportive path to achieving their professional goals cannot be overstated.

Continued performance, morale, and retention of rockstar team members require a robust exchange of feedback and recognition of both individual and team targets. By incorporating the annual review into your management philosophy, you provide your leadership team with a valuable tool to further their relationships with their team and their team's overall success.


Ashley HunterAbout the Author
As a Compliance Specialist for XY Planning Network, Ashley Hunter walks advisors through the registration process. Her keen attention to detail helps advisors understand the many rules and regulations of the process, and lets them cut through the clutter to determine what information is and is not relevant along the way. She is a self-professed “geek” with a love of all things related to regulations and documentation. Outside of work, Ashley is frequently spotted petting strangers’ dogs, paddleboarding, backcountry skiing, reading science fiction novels, and photographing pretty much everything around beautiful Bozeman, Montana.

 

 

 

 

 

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