Re-appraising the appraisal
It’s a very sad state of affairs, but if you ask a large room of people if they agree, that they are the person they are today because of their performance appraisals, you’ll get very few takers (actually, you’ll probably get none!) Okay maybe it’s a big ask to expect this familiar work process to yield such lofty results – but then again why shouldn’t we have high expectations. After all, this is such an important opportunity – one which brings manager and staff together to review performance, build engagement and deliver results.
What we do know:
- 74% of UK firms use the annual appraisal process as the principal means of improving performance levels (CIPD).
- 9 million managers in the UK are involved in staff development discussions each year, yet 43% don’t believe they are effective (CIPD 2016).
- Many managers feel uncomfortable discussing behavioural expectations and defining performance requirements. Also there is little consensus in terms of what outputs should look like.
- The average UK organisation now spends around 5 hours per employee per annum, on performance management, with costs estimated to be over £1150 per person (2013).
- Two thirds of employees who participated in the reviews found them to be either ineffective or only partly effective.
So if these processes have such little impact on people, why do we invest so much energy on them??
Perhaps it’s like the old Jerry Seinfeld joke about truckers honking their horns at attractive women who are walking by. They know it won’t make much of a difference (no one is ever going to jump in their truck as a result of the honking and then run off into the sunset with them), but the truckers don’t really know what else they can do.
Internationally the picture is even worse – with a staggering 70% of organisations believing that their performance management systems are average or below average. Research by PwC reveals that two-thirds of larger global companies are rethinking their appraisal process, with 1:20 now looking to scrap formal evaluations. Microsoft and Deloitte have already dropped formal appraisals in favour of ongoing feedback. Other large companies like The Gap have reworked their processes as well.
Many of these organisations are looking at moving to a continuous feedback culture which involves peers and customers, rather than relying on the formal annual process to improve performance. IBM have for example found that organisations which actively used ongoing performance methods had 20% higher levels of employee engagement. Also there is a heap of evidence that employees themselves in every size of organisation also want more regular and immediate feedback on performance.
The most recent company to make headlines by moving away from the traditional yearly reviews was Accenture PLC. Since autumn 2015, none of its 400,000 employees have undertaken a traditional appraisal system. Under the new programme, line managers give staff feedback on a project by project basis. The global professional services company changed because they believed the previous system was “costly and the outcome was not great”.
Annual appraisals have long been a fact of working life. However recent trends indicate that the days of routine annual performance review may now be numbered. Questions are being asked about how much value a once-a-year process based discussion with a manager may actually bring. Sure, handled well appraisals still present important opportunities for constructive discussion, goal agreement and development support, but increasingly we are seeing that the mechanical processes that characterise many of these systems are simply too rigid and inflexible to accommodate the needs of a fluid and adaptive workplace.
As Halogen 2016 noted ‘The main aim of performance management should be to improve performance, but it has too often become a ritualised and bureaucratic process that can distract managers from the regular connection, engagement and feedback conversations they should be having, as well as the deeper periodic discussions about development and growth opportunities’.
Closer to home
What we are seeing with our Clients here at Endor Learn & Develop, is that many of organisations do still find value in the annual / bi-annual appraisal process. They acknowledge that the process needs to be driven by people not bureaucracy and so are investing much more heavily in upskilling managers to help them coach their people. Many organisations have revisited their paperwork, to make it more flexible - although generally most appear reluctant at this point in time to follow the Accenture / Microsoft lead and abandon performance management systems altogether. What we are seeing is evidence of a growing appetite for more inventive ways to capture and feedback on employee performance on an ongoing basis, to work more collaboratively with employees and apply timely and effective ways to develop their performance as and when it is required.
There is strong evidence that employees who receive ongoing feedback deliver greater returns.
Total reliance on retrospective KPI data seems finally to be being put to one side in favour of a more balanced, ‘strengths and contributions’ based assessment of overall performance. There is also a greater recognition of the need to face forwards – investing more time in appropriate goals which, where possible, can be linked to the long term aspirations of the employee.
What are your thoughts? What works best for you, have you any practical tips to make your performance management process come alive for all participants?
For more information on what we can do to help you to invigorate your performance management process, or if you have a learning project in mind that we could help you with, we’d love to hear about it. Get in touch on 01724 601559 to speak to a member of our team or drop us an email at firstname.lastname@example.org.