In a few weeks we will commence judging for our Employer of the Year at the B&T Awards and Cassie Sacks, managing director at we.people, thought now would be a good time to discuss why performance appraisals are not a good development and retention strategy, unless they have been re-engineered.
Why the process must change?
Well, times have changed. The way we communicate has changed. We no longer have to run home and wait for that important phone call; instead we carry our phone in our pockets and can take that call anywhere at any time. The way we consume media and get our news has also changed, before we use to wait until it was printed on newspaper and then we read about it possibly days after the event. Now we get news through many media channels, on our phones instantly at any time of the day as it happens.
So why do agencies still think the same way when it comes to performance reviews? Why do “HR” experts still insist on using the old set and forget performance reviews as a development and retention strategy? Why do agencies have annual reviews in the first place? They are a remnant from traditional top-down agencies where they “weed out” the bottom performers every year. This approach is based on a philosophy that “we can’t totally trust managers” so we’re going to force them to fit people into these rating scales.
More and more companies like Adobe and recently Accenture have decided to radically change “scrap” or “re-engineer” their performance appraisal process and I strongly believe this is the way forward.
If you have any doubts here is some well publicised research on the effect old performance appraisal:
- Employees want regular feedback much like how they consume media, so a once-a-year review is not only too late but it’s often a surprise. Regular coaching is the key to alignment and performance.
- Managers cannot typically “judge” an entire year of work from an individual at one time.
- Manager-employee relationships are not 1:1 like they used to be. We work with many leaders and peers during the year, so one person cannot adequately rate you without lots of peer input. This is time consuming and to be honest quite frustrating for the employee.
- While some employees are a poor fit and likely are poor performers, these issues should be addressed immediately, not at the end of the year.
- Some companies really do have a lot of high performers, so forced ranking eliminates great people and damages the culture.
- People are inspired and motivated by positive, constructive feedback – and the “appraisal” process almost always works against this.
- The most valuable part of an appraisal is the “development planning” conversation – what can one do to improve performance and engagement – and this is often left to a small box on the review form.
Well, I’ve probably discussed these issues with what seems like 100 agencies over the last year and our research shows more and more that agencies are ready to let this process go.
Organisation structures have changed and companies need to be more agile. We have a shortage of key talent and the keys to success now focus on regular alignment, coaching, creating passion and engagement, and continuous employee development.
So the moral of the story is, don’t let your “HR” expert convince you that annual performance reviews are a good strategy, because there are many others that have a better outcome.