Theoretically, performance management should happen every day. Think of it this way, if Lionel Messi was playing in a way his manager, Luis Enrique, didn’t like, would he wait until the end of the season? Absolutely not. They would address the problem immediately and send Messi in the desired direction.
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HR researcher Josh Bersin has estimated that 70% of Multi-National Companies are moving away from the outdated annual review approach to performance management. Unsurprisingly technology firms such as Dell, Adobe, and Microsoft are leading the way. Several professional services firms including Deloitte, Accenture, and PwC have joined the movement. Even GE, the long-time proponent of the traditional appraisal has decided to axe its annual appraisal model. Here’s why.
Lack of Efficiency
Appraisals take a lot of time to complete. In a study by CEB, the average manager reported spending about 210 hours (almost 5 weeks) doing appraisals each year. Yet despite this, 90% of HR managers believe that annual reviews do not yield accurate information. Aside from the obviously labour intensive nature of annual reviews, they also don’t do the environment any favours as they generate large amounts of tedious paperwork.
Stunted Progress
By definition, such appraisals are only carried out annually. Therefore, valuable time, efforts, and resources can be wasted as employees can spend a considerable chunk of time heading in the wrong direction. With regular reevaluation of progress and goal setting, such time wasting and stunted progress can be prevented.
Demotivational
To make performance appraisals easier to complete, they are simplified for the manager, thus the subordinate is generally rated on a numerical scale of sorts. Social science research indicates that employees would much rather be considered ‘average’ (a rather depressing state of affairs) than an assigned numeric value for their efforts.
The employee experience is important; and as such employees want to be thought of as more than a number; and based on that number, receive some sort of generic feedback. The entire annual review process is utterly impersonal, demotivating and ineffective.
Failure to Promote Team Work
Teamwork is vital to the success of most companies. It is through the sharing of thoughts and ideas that people come up with new and innovative ways to operate and conduct their business. The annual appraisal pits employees against each other, as each member tries to out-rank his or her colleagues in the continual struggle to achieve the highest ranking. This leads to a lack of cohesion and nonexistent teamwork, in addition to a negative mentality and poor work atmosphere.
Rigidity of Annual Appraisals
As these appraisals are carried out (and very often mandated) on an annual basis they are thoroughly rigid and inflexible. This provides companies with a very real problem as company projects may vary in duration; ranging from weeks, to a month, or an entire business quarter. Therefore, a review process should be flexible enough to reflect the changing work environment.
As so many companies are overhauling their reviews processes, there is little disagreement that continuous and transparent feedback is the key to effective performance management. In Scaling Up Excellence Stanford Professor, Bob Sutton also indicated the need for transparency and a two-way flow of information between the employee and the manager, as well as amongst peers:
“[N]o matter what system your company uses, regular, frank, and constructive conversations and feedback between managers and their people, and among peers, is the hallmark of a culture and a company that practices effective performance management, and that such exchanges can happen under both traditional and newer systems.“
While indeed, these types of exchanges can happen “under both traditional and newer systems,” the software solutions from these newer systems are designed to make the process of giving feedback a less labour intensive, and therefore, a more positive overall experience. For further reading, discover why Adobe, Deloitte, and Accenture ditched the annual review process in this white paper from Impraise.
 Steffen Maier is cofounder of Impraise a web-based and mobile solution for actionable, timely feedback at work. Based in New York and Amsterdam, Impraise turns tedious annual performance reviews into an easy process by enabling users to give and receive valuable feedback in real-time and when it’s most helpful. The tool includes an extensive analytics platform to analyze key strengths and predict talent gaps and coaching needs. |
Absolutely right, 12 months betwwen an appraisal and the next one could be really disruptive !