Stop Conducting Annual Performance Appraisals

Stop-Conducting-Annual-Performance-Appraisals

We have entered the time of year most employees, and many supervisors dread; the annual performance appraisal. This annual ritual is a process where organizations review and discuss the work performance of their employees for the past year, in hopes of improving individual and organizational competence. By now many of your employees are already feeling a bit anxious about the inevitable email from Human Resources, or their supervisor which signals the beginning of a process which for some organizations takes nearly three months to complete.

I spoke with a friend of mine recently, who told me he would be preparing for his annual performance review in a few weeks. I asked him to describe what the experience is like for him at the mid-sized manufacturing company where he works. He said it usually starts with an email from his supervisor that goes something like this:

John-

I have put a half hour on my calendar so that we can review your 2012 performance appraisal form. We will be discussing your overall performance for the past twelve months, and I would also like to give you some feedback on a few performance issues that occurred earlier in the year. I would also like an update on the status of the performance goals I set for you at the beginning of the year. We can also use this time to discuss where you see yourself in the next year, what development activities you would like to participate in, set some new performance goals for this year, and discuss whether your career goals have changed since our discussion last year? Lastly, if time permits we can have a discussion on what you feel you need from me this coming year. If you have any questions please bring them to the meeting with you.

Best regards,

Sound familiar? A communication of this sort is similar to what happens in many organizations around the world. At first glance it may appear that there is nothing wrong with a process like this, but when you look closer there are some fundamental problems. Employees are brought in to receive feedback and discuss in many cases twelve months of work performance activities, and receive ratings which most don’t place much significance on anymore.

The annual performance appraisal process is not a new concept, what is relatively new however; is the incredibly complex system it has become. The process has evolved from simple one page forms, to complex online systems and processes which take dedicated experts to manage. However; according to studies many agree that the traditional process still does not satisfy the needs of measuring and improving the performance of staff.

Before you launch into your annual process this cycle, I’d like you to consider three reasons the “traditional” annual performance appraisal process should be reformed or at the very least reviewed.

  • The traditional process is outdated. The friend I referred to earlier, happen to be a “Millennial” or sometimes referred to as “Generation-Y”, (terms defining the generation born in the 1980s and ’90s). According to some statistics, by 2014 there will be more than 58 million Millennials employed in various organizations in the U.S. alone! Countless books and articles have been written about the attitudes and motivators of Millennials but one theme that resonates across all of the literature is this, they crave feedback! Unlike Baby Boomers whose main driver was just to get the job done, and their paycheck was their feedback; Millennials want feedback direct and often. The traditional appraisal system often only gives meaningful feedback once or twice a year, and most Millennials don’t see much value in a process that asks them to wait that long to get feedback on how they are performing. You risk losing them to another manger or company who can meet their needs.

 

  • The traditional performance appraisal process can actually be counterproductive. If the intent of the annual performance appraisal is to encourage better individual performance and make organizations more effective, then the annual review is counterproductive to that notion. The rigid formality of the process often becomes a crutch for poor managers and an obstacle for good ones. Poor managers often lack effective interpersonal skills, choosing to interact with staff as little as possible especially when it comes to delivering meaningful feedback. While appraising performance is important, this annual event can actually encourage the behavior of saving all of the performance issues (positive and negative) for one grand conversation. The performance behavior can often be months in the past by the time the review meeting occurs, making the discussion somewhat irrelevant. Good managers are often burdened by the process because they find themselves repeating what they have already discussed throughout the year.

 

  • Everyone hates it! That may be a bit of an exaggeration, but if you listen closely you will hear the grunts and groans from nearly everyone involved in the process. How often have you heard a supervisor complain that they are ignoring important work to complete their employee’s annual appraisals? How often do you hear staff express an apathetic attitude towards the process? What my friend described as “sweaty palms”, and the cynical attitude he showed towards the process is not all that uncommon. Much of the cynicism is rooted in the belief that the process has no bearing on driving better performance, the ratings are meaningless, and management is complying with a “forced ranking” model. These attitudes whether real or perceived have become one of the main obstacles to getting quality performance reviews and meaningful feedback through the traditional process.

Many organizations are aware that this process needs improving, and most crave something that will make the process more effective. Some organizations have even begun employing “rebranding” tactics such as referring to this annual process with names like “career path management sessions” in hopes to improve employee attitude towards the exercise. So what’s an organization to do?

  • Change the focus from annual performance appraisals, and put more time and resources into developing a culture of performance management. True performance management is an ongoing process that occurs throughout the year, not during an annual event.
  • As senior leaders you must begin changing the culture to one where managers are recognized and rewarded for continuous performance management skills, and not for timely completion of performance reviews.
  • Develop your manager’s interpersonal skills so they are more comfortable engaging with staff, and give meaningful feedback more often and in a more informal setting.

I’m not suggesting that you abandon the notion of performance appraisals altogether, that wouldn’t be practical. I realize that some type of structured process is necessary to ensure fairness and to comply with legal and company policy requirements. What I am suggesting though, is you take a long hard look at where the bulk of your resources and efforts are aimed. Let’s curb this trend of trying to manage these ever growing complex processes and systems, and get back to more effective methods that affects performance; like developing effective performance management and leadership skills in your leaders.

See next month’s article when we discuss three quick tips to make continual performance management easier, and we will reveal one the most effective coaching skills a supervisor can have in her/his toolkit.

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