Calling Death of the Annual Performance Reviews?

August 24, 20158:27 am688 views

Most companies and HR professionals follow the policy of annual or semi-annual performance reviews. However, according to a report by psychologists at the Rice University, they cite common problems that annual performance reviews inherently present to HR professionals at large.

Considering the importance of employee feedback in the form of performance appraisals annually, the social environment at work can either promote employee growth or inhibit it. There is a growing need for companies to evaluate and obtain accurate talent information to implement performance management systems in place, considering the business and organisation growth vision.

Jisoo Ock, lead author and Rice doctoral candidate in psychology says in the press release, “Organizations by nature are large social environments, and we cannot forget that context when making use of performance-rating data. We think that the critical factors of interpersonal relationships and interpersonal politics in an organizational environment may have a profound influence on a company’s review process. But these factors are typically under-researched.”

Ock further suggests: “Continuous feedback that occurs on a day-to-day basis in such an environment is much more likely to create real-time alterations in employees’ job performance behaviours than are infrequent or annual formal feedback sessions. Compared with formal feedback, informal feedback occurs naturally and is perhaps unexpected, which is why there needs to be an environment in which organizational members feel comfortable about providing and receiving frequent informal feedback.”

In recent news on The Washington Post, Accenture CEO Pierre Nanterme announced that the company is getting rid of annual performance reviews and rankings from 2016. The company further plans to implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.

See: 6 Keys to Improve Performance Reviews

Deloitte also announced a pilot program under which performance rankings would disappear. The company statement said, “Companies worldwide are questioning their forced ranking, rigid rating systems, and once a year appraisal process. This is the year a new model of performance management will likely sweep through HR.”

HR managers who make crucial decisions based on performance rankings and scores should stop the process now. Instead performance management as a practice should focus on motivating employees for bettering future performance in the job role. Brian Kropp, Executive Director of CEB’s HR practice suggests in his blog, some questions that HR professionals should answer for themselves before executing annual performance reviews as a part of the policy plan are:

  • Is the process of performance review backwards? Are managers using past performances as a guide to estimate employee productivity in the future? During annual performance reviews, managers should instead focus on motivating employees to better their performance in future, rather than casting their feedback backwards and highlighting failures.
  • Who provides input during a review? Managers now have direct reports, and it’s important for employees to support peer collaboration to get work done fast and easily. Considering these changes, feedback should come from multiple sources in the team about an employee performance, instead of inputs and opinions from single key personnel.
  • Is employee provided feedback consistently or just on an annual basis? HR managers should think of coaching heads of departments to provide timely and prompt feedback to employees such as to offer them fair chances for betterment on job. This will help the manager save time and efforts involved in remembering good and bad performance reviews to rate an employee at the end of financial year.

Tom Monahan, Chairman and CEO at CEB suggests, “To be clear, none of these companies eliminated performance reviews completely—nor should they in my view. They have done away with what became arcane and ineffective aspects of the process in their industries, namely using scores or stack ranking as the centre piece. Rather than be beholden to bi-annual review cycles, managers and employees at progressive companies are engaging in constant dialogue around expectations, goals and development areas.”

Monahan added: “Whether you call them ‘check-ins’ as Adobe does or something else, what’s important is that you model the approach that emphasizes what can and should be done today and in the future, rather than deconstructing the past.  Not only does this make course correction more impactful, but it eliminates the doomsday cloud looming over the dreaded review “conversation.”

Also read: Don’t Think the Performance Reviews are Accurate? Crowdsource!

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