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If the appraisal is dead, what’s next?

Decreased employee performance, outdated structures, unhappy employees – are your annual appraisals doing more harm than good? It might be time for a change…

Whether it’s pulling together year-end accounts or forward planning for the months ahead, the close of one year and the start of the next is often a period of evaluation and change. Like many businesses, you may have been thinking about performance reviews or appraisals lately, but have you stopped to consider whether they still work?


2013 research by HR strategies resource Bersin by Deloitte found that there’s a “strong positive trend” away from traditional appraisals, with many high performing businesses, including Adobe and Juniper, looking for a different way of doing things.

The traditional approach to appraisals has its roots in the early 20th century and was originally introduced as a simple method of income justification. Since then it has developed to have three main functions, according to Dr McGregor, the author of The Human Side of Enterprise: administrative, informative and motivational. By determining salary and delegating responsibility; addressing strengths and weaknesses; and identifying and creating experiences that encourage employees to improve performance; these three functions still form the bedrock of most annual reviews today.

 

Managing performance is about more than just one annual conversation

So why are businesses moving away from this tried and tested method of measuring performance? “Annual reviews are an artefact from traditional top down organisations, where we had to ‘weed out’ the bottom performers every year,” founder of Bersin by Deloitte Josh Bersin explains in his article on the subject on Forbes.com. “Organisational structures have changed and companies need to be more agile.”

And some experts go even further – explaining that it’s not just an evolution in organisational structures that’s driving this shift from the traditional appraisal, but rather the negative impact they can have on business performance. Research from the Psychological Bulletin conducted by A. Kluger and A. Denzi found that at least 30% of performance reviews ended up in a decrease in employee performance, while a study for the Society of Human Resources that found 90% of performance appraisals produce an extremely low percentage of top performers.*

 

90% of peformance appraisals produce an extremely low percentage of top performers

There may be an increasing groundswell of businesses and experts who think that the traditional appraisal should be scrapped, but if that’s the case, what’s the alternative? In my role as an IIP Practitioner, I’ve been lucky enough to work with plenty of exceptional managers and true leaders from across public, private and not-for-profit organisations who’ve learnt first-hand that managing performance is about more than just one annual conversation. It’s a combination of different techniques which, when embedded, ensure you really understand where your people are succeeding where they can improve and what support they need. So here’s what they've got to say…

 

Make it day-to-day

Managing performance is all about the support, guidance and direction you give people on a day-to-day basis. If you ‘save up’ issues for discussion at the annual performance appraisal and don’t deal with these as they arise, you’re taking the wrong approach.

 

Share the bigger picture

Understand your targets and meet with your people one-to-one to discuss these on a quarterly or monthly basis. Set aside uninterrupted time to share the priorities that you need each individual to focus on over the next quarter or month. What are the ‘big hits’ for the business? What do your people need to deliver to ensure they achieve for the team and the organisation? One-to-ones, job chats or catch ups are a space where you can discuss the priorities for each team member’s individual areas and what support you, as a manager, need to provide to help them deliver these. It creates a supportive environment and it works.

 

Think SMART

Ensure you agree unambiguous outcomes of performance with the individuals that report to you. Make these tangible and always think SMART: Specific outcomes that are Measurable, Agreed, Realistic and Time-bound.

 

Monitor progress, but do it differently

Catch your people doing things right. The truly great managers and leaders I speak with regularly make sure that they provide recognition, encouragement and praise. They don’t have a ‘policing’ role or focus on the minutia of what’s not perfect… they direct their attention towards the ‘big hits’ for the business and make sure they recognise and emphasise how their people are making positive progress.

 

Celebrate success

In my role as an IIP practitioner, I often ask employees when their line manager last thanked them for their input and contribution. The response is always enlightening; it either confirms a culture of recognition and verbal thanks within the organisation, or shows that people’s potential is not being recognised, valued or unleashed.

Do you need help getting started with a performance management approach that really works for your business? Get in touch with Investors in People and talk to a practitioner.