Performance Appraisals have received a lot of criticism over the past several years. The criticisms range from being bias to their destructive relationship between managers and their subordinates. Most managers and employees dislike the annual process and they see the results of the evaluation only to make salary and promotions decisions.
Accenture, one of the biggest consulting firms have eliminated their appraisals. And, Accenture is quickly followed by Deloitte and other professional services firm like Adobe, Gap and even General Electric. Ten percent of Fortune 500 companies are joining the trend.
They are moving from Performance " Management" to Performance " Achievement". Their new approach includes real time, forward looking and frequent conversations that help people understand expectations, build on their strengths, understand areas and growth and achieve their career aspirations. The revolutionary change is to do away with performance ratings. Read this article: Dump Employee Appraisals...and Help Employees Be their Best- The Huffington Post
They are also experimenting with replacing a once a year performance review with more frequent conversations, introducing an app to help managers and their employees share feedback and testing the idea of using no rating at all.
In redesigning its performance management process, company leaders tried to adhere to the theme of "trust." The new process is meant to empower employees to take more initiative and voice their ideas. Eli Lilly says that's helping strengthen partnerships between supervisors and employees.
They moved from yearly performance rankings to frequent "check-ins" where managers focused on targeted advice and coaching. There is no prescribed format or use any technologies to guide each conversations. The aim is to give people information when they need it rather than wait till year end. Employees are now compensated based on how well they have met their goals- forced rankings have been abolished. Managers are given more say in their people's salaries and merit increases. Accountability is amplified by an ongoing "pulse survey" to measure how well each manager sets expectations, gives and receives feedback and helps people with their growth and development. This experiment appears to be having the desired effect as described in this article How Adobe Got Rid of Traditional Performance Reviews
How organisations play out the different approaches in their performance management process, will vary, of course company by company. The pace of change, will vary too. However, in the above examples we can see some trends in the performance management practices.
Moving from a one conversation at 12 month intervals but rather frequent, in the moment conversations and on-going dialogue between the employee and the manager
A shift in backward looking on performance to forward looking on individual's development discussions
Performance data are used less and less as a basis for compensation decisions
Separate the reward conversations from the development conversations
Empowering the employee to be more responsible for his or her own career. Employees can initiate conversations about their objectives instead of waiting for their leader to do so. Request regular feedback to avoid unpleasant surprises at annual review time
No formal rankings but adopt Employee Goal Setting approach which focus on objectives and key results as key measures. The key is for managers to coach employees toward and achieving their goals
Performance management must become more personalized, more real time, and more progressive in terms of updating goals that align to the rate of change in organisations. The process needs to focus on maximizing the career experience to achieve both business results and personal satisfaction. Use what works for your company but in the re-design stage, talk to your employees. In today's organisations which is built around highly empowered teams, it requires a radically different approach to performance management and your people will tell you how.