Annual Performance Appraisal is Passé

By Aditya Mishra | March 26, 2017

ciel blog - performance appraisal
Organizations all over the world believed that performance appraisal promotes competitiveness, objectivity, transparency and fairness. Over the years in the 90’s and the following decade, organizations invested huge amount of energy in this process right from designing the system, training people to implementing it. Each year, this internal process of the organization consumes a huge amount of energy of the HR team, leadership team and the supervisors. The time of senior folks is significantly higher than that of the juniors and hence, the appraisal process is a huge cost to the organization.
Our workforce has become a lot younger with the entry of millennials and accordingly, the leaders and supervisors have been learning to adapt to the new realities of the workplace. They are learning to offer quick feedback to their teams, positive as well as negative. Given the new developments at workplace and the costly nature of the appraisal process, leaders have started evaluating the returns on the investment on the process. A couple of years ago, large organizations in technology and consulting domains kicked off the revamp.

Let Performance Appraisal happen each day!

Today’s employee looks for fair assessment of the performance output and is open to suggestions for change in his style and behaviours. The supervisor must have the intellectual bandwidth to observe these and the necessary ability to articulate them. And most importantly, these need to be communicated at the appropriate time so that the feedback is received and acted upon. Annual appraisal process creates the setting for a discussion, but one cannot wait for the particular event to offer the feedback. Rather, it has to be a part of day to day work. Organizations must reset the expectations of their workforce to seek feedback and discuss possible changes in behaviour every now and then. Hence, the new normal on performance appraisal makes it an integral part of day to day conversation with the boss.
A typical performance appraisal discussion is a hurriedly-convened meeting by the boss. S/he normally comes ill-prepared for the discussion, offers a few generic inputs to the employee, ticks off a task on the to-do list, finds no time to record the discussions meaningfully and the employee has no means to know what gets recorded on his or her career records. I wonder if this helps the employee in his or her development; if it helps the organization in improving the performance levels at all.
Organizations do well in moving away from the half-yearly or yearly ritual of holding this process all over and spending a huge amount of energy. Rather, make it a day to day practice where the discussion is not limited to the tasks but the process, the behaviours and possible development opportunities. Employees and their supervisors have to learn this new way of engagement.

What about Measurements?

One of the most wasteful activities that happens in Performance Appraisal is to re-certify the goals of the review period and the actual achievements. And of course, many a times, the goals are not set in time and hence, there is a confusion. Sometimes, the goals are revised along the way due to several factors. Who keeps the records and digs into the past to determine the correct figures? With the advent of technology, digitization of work processes is on the rise. Hence, measuring the actuals and keeping a record of the goals is getting easier with each passing day. Organizations need to wake up to this possibility and free the performance discussions from the wastefulness. The discussions have to achieve what they are meant for – recognise the achievements, make the employee feel proud and agree on the opportunities to improve further.

Goal setting process is rigged?

The bosses set stiff targets to stretch their teams and drive higher levels of ambition. Organizations in their zest to be transparent and objective, prescribe performance scores, salary hikes and bonuses linked with achievement of targets. So, employees aggressively push for a low target to maximize their salary hike and bonus. How counter-productive it is for the organization when the negotiation of the target is not around the possibilities of achieving an ambitious goal rather on an individual’s earnings! Annual appraisal process cannot achieve this. The HR fraternity and the business leaders are trying to find a way by which the goal setting process is not rigged, rather is anchored on thinking of possibilities and ambitions.

What about salary hikes and bonuses?

Typically performance appraisal processes end with salary hikes, bonuses, promotions, new roles and goals for the next review period. Since many of these are centred on the appraisee’s personal gains, they hinder an objective discussion on performance. The employee’s mind is fixated on knowing the performance score, salary hike, bonus etc. The days from the start of the appraisal process till the final results are given to the employee are quite busy in water-cooler conversations. The organization loses momentum. Why should there be annual appraisals then?
Employees are quite alright to hear about their performance. However, the method of comparing theirs with the performance of the others in the team brings uncertainties and anxieties in their minds. Hence, organizations are moving away from the method of force-ranking performance levels and fitting the scores into a bell curve.
The new practice is to link Salary hikes, bonuses and promotions with the assessment of the individual’s performance against targets, benchmarks and potential. And appraisal discussion is not a customary annual conversation. It is a part of day to day work where the boss recognizes good deeds one to one as well as out in the open; opportunities for improvement are identified and worked upon as a matter of regular life at work. Let there not be a specific event called annual appraisal discussion.

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