Well for many of us as managers or employees it is that time of year! Yes it’s time for the annual performance review(s).

I don’t know if you have picked it up, but there has been quite a debate about the value and effectiveness of the traditional annual appraisal/ performance review/ performance evaluation for the past year or two. For example, Accenture have given up on them in the form that they were using and Adobe have adopted a more regular check-in process to name but a few. At the end of 2015, at least 30 of the Fortune 500 companies had got rid of performance evaluations altogether.

This is perhaps not surprising. As a manager and an employee (for many years!) my experience concurs with many of the problems with existing systems and I would like to highlight my top 3 issues with conventional performance management processes:

  • Not Agile – Having annual objectives set at one point in the year is often no fit for purpose for the business challenges we face. The Agile methodology is being more and more adopted in many spheres of businesses and our way of agreeing objectives needs to reflect that. So often annual objectives can become a straight-jacket rather than an enabler. Objectives can be self-serving rather than enabling – does that ring a bell? The more Agile approach would ‘encourage rapid and flexible response to change’.
  • Not motivating. This quote from a CNN article reflects the experience of many employees and managers. Going through the ritual and sometimes stress of an annual assessment and then ending up with a ‘meets expectations’ (as a large proportion of the population get) sucks the energy out of many. What started out as a process for incentivising employees often ends up being the reverse. It is seen as ‘judgement day’. Often the feedback given, results in negative impacts on performance rather than positive.
  • Biased. Some managers are really hard to please (hard markers) and some are easy (easy markers). Despite ‘calibration’ processes this is difficult to eliminate. I have had both types of managers in my working career so can speak from experience.

Having said that not everyone is throwing the whole idea out but is looking to make the performance review process work better for the business and the individual. In a recent HBR article on Facebook it is clear that some hybrid models are emerging. For example in mitigating bias, Facebook ensure employee peers evaluate each other – so it is not just one manager doing the review. They also share what they have written with each other which ensures transparency.

Facebook are trying to keep the focus on the assessment of the ‘performance time window’ not the person. So often people are pigeon holed (A, B or C performers). Employees at that company have 33% chance of getting the same rating from one year to the next. So it is quite a dynamic situation unlike many other companies. Also poor performers one year can be high performers the next.

So what do I think the useful take-outs are for you and I as managers of people?

  • Give regular ongoing quality feedback. This can be more motivating and be more useful in optimizing people’s performance. This should be coupled with objectives that can be ‘flexed’ according to the evolving business situation rather than at one point in the year.
  • Get real feedback from colleagues and internal/external customers. This helps eliminates bias.
  • Recognise that recognition and monetary reward are 2 different things. Every employee has emotional and physical needs when it comes to recognition. Yes, they need to be congruent (i.e. aligned) but often the performance management system focuses on remuneration at the expense of what the experience of the review is in terms of employee motivation.
  • Make sure whatever you are using is working – the performance management system is a tool not a ‘master’ – be careful not to be its servant. Do you need to evaluate the effectiveness of your performance management system? Is it a win-win for the business and the employee? If not change it.
  • And finally… ask the question ‘ if you owned a business with 5 employees how would you design a fair and motivational process?’ Work out what that would be and then seek to scale it.
Categories: businesss