Adieu to Annual Appraisals
Monday, August 29, 2016 5:10:54 PM

What to keep in mind while framing Alternatives to Annual Performance Review

The annual performance review which has been a dreaded exercise to be completed between managers and employees till a few years back is being gradually given up by companies to shift toward practices that are more meaningful, something which actually boosts performance. You may have heard companies such as Accenture, Netflix, GE, and Adobe are giving up the annual ritual of performance reviews. Performance appraisals end up focusing on goals made 12 months ago and they may not be relevant to the current scenario.

There has also been this outcry that rating and ranking employees over a bell curve (rank and yank) for performance evaluation has sometimes resulted in discriminatory acts, with good performers being labelled as mediocre, and so-called underperformers being shown the door. The bell curve has been perfect for misusing and manipulating statistical data. As a result, Infosys bade farewell to the bell curve for performance assessment in 2015. This also brought down the attrition rate of Infosys to 13%. Microsoft also did away with its ranking systems in 2013. According to management research firm CEB, six percent of Fortune 500 companies have gotten rid of forced rankings. These companies believed that rankings didn’t necessarily yield better performance among employees. But are they really giving it up? What are they doing differently to replace the annual exercise and still derive the best performances out of their employees and keep them engaged? You may have heard most of these are choosing to engage in ongoing discussions between managers and employees.

The bottom line is that the employee performance review hasn’t totally disappeared. But the old ways of accomplishing it are probably seeing the last days. Most companies are trying to give the annual performance review the much-needed makeover and turn it into a meaningful and ongoing cycle.

Most progressive companies such as Accenture have abolished the following practices: 

  • Rankings
  • The once-a-year evaluation process
  • The annual formal meeting
  • Comparisons to other people

 

However, Accenture will implement the following or make the following already existing practices more robust:

  • Managers to give timely feedback to employees, mainly share information with employees about how they are doing
  • Give information in real time, during performance to guide, correct, or coach
  • Evaluate a person vis-à-vis his own role and not compare to someone else

 

3 essential aspects you need to consider when reframing a company’s performance management approach:

  1. Encourage conversations not reviews

As stated earlier, many organizations have dropped the practice of reviewing or rating employees once a year. Geoffroy De Lestrange from Cornerstone OnDemand, provider of cloud-based solutions for talent management, opines that “Traditional annual appraisals have become too unwieldy, and ultimately end up becoming a conversation about pay. The conversations have ceased to be an opportunity to talk about skills gained, or growth opportunities sought, and even when they are, there’s too many topics mixed up, so all you get is a meeting that doesn’t do much.”

The present approach is  that many companies have started introducing the practice of having conversations between managers and employees for continuous performance management. Some big names such as Accenture, Deloitte, and Microsoft have adopted this trend. These conversations could occur on a regular basis or be aligned with project or assignment completion. This practice of constant communication makes sense as employees need to know how they are performing so that instant guidance can be provided to improve the performance or meet project goals, if required.

Your company too can leverage conversations to something that employees want to look forward to in order to connect with managers and discuss their career plans and develop competencies. Managers also need to have these informal discussions amongst themselves to decide who the company should be investing in, to judge who is going to leave, or who is eligible for newer roles and challenges.

  1. Provide regular feedback

“Feedback is the breakfast of champions.” Kenneth H. Blanchard said in his book The One Minute Manager. Feedback is a tried-and-tested tool for performance management. A company is only as good as its employees that is why it is so important for managers to give feedback to subordinates for assessing and improving performance. It is best to have managers give both formal and informal feedback and recognition.

Feedback should clearly convey what they are doing well, why the work done is valued, and what needs to change or to be fixed or improved and why. Your company’s managers need to be trained to give simple, specific feedback and it needs to leverage technology such as mobile devices and social media networks to give feedback from anywhere and anytime. In today’s digital age and with the entry of Generation Y or the millennials, it is important to stay “connected” through technological and collaborative platforms to give feedback or connect with the workforce. 

Feedback could be given depending on your company’s culture; it may happen at regular intervals or at the end of an assignment.

Feedback should be:

  • Ongoing, real-time, and positive encouragements about performance
  • Immediate recognition for work
  • Additionally be facilitated through peer reviews and stakeholders reviews
  • Also centered around upgrading of skills
  • Done in an open environment of collaboration

 

  1. Make data available with transparency.

It is imperative for managers to operate with a level of transparency while exchanging and sharing information on employees and building a brand for the employees. Information flow and transparency have become pervasive in the workplace. For real-time performance management — zeroing in on who are ready for growth or who are to be internally shifted— managers need to be transparent in telling what is working and what is not. Technology, such as a central database, should be designed to help employees build capabilities and the company to store information. Managers can refer to this talent information while making decisions on employees. The more transparently this information is made accessible, the more realistic the results of the performance management system will be.

 

It is advisable to allocate a structured time frame to design and evaluate an employee’s career in the absence of a quarterly or annual performance review.