The annual performance review process, or the appraisal. I wonder what feelings these words conjure up for you? Is it an opportunity to have a great conversation with your manager about your previous year’s performance, to be open and honest about your strengths and development where you leave feeling enthused and excited about next year?
Most people’s reality does not match with this. And believe me, being in the HR team and having to manage this process isn’t fun either. It’s the time of year when HRBPs become report runners, highlighting who has, and who hasn’t completed their reviews; and that invariably leads to disagreements with managers who feel they HAVE completed their reviews, but probably haven’t pressed the submit button. I can honestly count on one hand the opportunities I had to coach and support managers to increase the quality of their conversations. I became driven along by the process and the timescales, rather than coaching managers to manager their people.
Thankfully we are moving on from what I feel is an outdated model, that neither employees, line managers nor the organisation is getting much value from. I think the biggest limitations of traditional annual reviews is their heavy emphasis on financial rewards and punishments, and their end-of-year mentality. This leads to people being accountable for past behaviour at the expense of improving their current performance and developing talent for the future – both of which are critical for organisations’ long-term survival. And how many people really work in a world where you can set your objectives for the year, and then not find those objectives change?
But let’s take a quick step back and understand how we got here in the first place. It would be foolish of me to sweep away an approach that has been in place for so long without really understanding its original purpose and intention. Historical and economic context has played a large role in the evolution of performance management over the decades. Looking at this from an employer’s perspective, when talent (people) was plentiful, the focus was on which people to let go, which to keep, and which to reward. In these circumstances traditional appraisals with their emphasis on individual accountability worked pretty well. However, when talent is in shorter supply, as it is now, developing people becomes a greater concern—and organisations have to find new ways of meeting that need.
Then that leads me to another issue – the tension between the traditional and newer approaches stems from a long-running dispute about managing people. Do you “get what you get” when you hire people? Should you focus mainly on motivating the strong ones with money and getting rid of the weak ones? Or are employees malleable? Can you change the way they perform through effective coaching and management and intrinsic rewards such as personal growth and a sense of progress on the job?
With traditional appraisals, the pendulum had swung too far toward the former, more transactional view of performance, which became hard to support in an era of low inflation and tiny merit-pay budgets. Those who still hold that view are railing against the recent emphasis on improvement and growth over accountability.
No guesses for what I believe about performance? People are malleable, we learn and grow all the time. Its short sighted of an organisation to focus only on their high performers or high potentials; and what people want from work and a career is also changing. Organisations need to adapt to these changes if they want to compete. Some of the traditional people policies and practices also need to move with the times, and I’d argue that the annual appraisal is one of those processes.
How do I suggest that the appraisal needs to change? There isn’t one best way, but there’s certainly core ingredients I think should be in any process:
- Be clear on what the real purpose of the system is. Any system will fail if you are not clear on its purpose or what you are trying to achieve. If you simply want a way to assign performance ratings so you can allocate pay and bonuses, then I would suggest a far easier way rather than creating a performance management system.
- Make sure the system is aligned to your business strategy, more than simply sticking your values into it. If you’re operating in a rapidly changing market place, then your system needs to rapidly change.
- Make the whole process admin “lite” conversation heavy.
- Use technology to do the donkey work not managers and HR professionals, we have too much work already!
- Make sure it enables feedback close to the event, and encourages forward looking conversations
A few months back I was asked to speak on a webinar about Performance Management, I’ve included the link here. If you are interested in hearing more about my thoughts on this topic, please feel free to listen.
But if you are I the middle of re-thinking your appraisal, or performance management process please contact me. I’d love to help you re-design and really get the most out of the talented people you employ. I offer a free audit of your current system to give you an idea of where to start. Click here to Contact Me and include the words “performance management audit offer” in the message box.