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The Death of the Performance Appraisal
Published Thursday, May 4, 2017

A growing body of data suggests that the traditional annual or twice-yearly performance appraisal may have outlived its usefulness. Today, information is both transparent and instantaneous, goals are mutable and organizations of all kinds are ditching the paper trail.  

The problems with performance appraisals are wide ranging, including burdening managers with policing the process (as well as upper management and HR to police managers by chasing down delinquent forms). They have also been more rearview mirror (focused on the past) than windshield (focused on plans to develop employees’ skills and engagement) in nature. A yearly or twice-yearly conversation is always dependent on trailing indicators.

Perhaps more telling, goals set in January are subject to change as new organizational priorities emerge. In a best-case scenario, what often happens is that the manager must give the employee he or she is reviewing a mulligan of sorts, because the goals are dated. Then, the goals are either abandoned or simply pushed into the next review period with little revision.

So how can we evolve toward a more efficient and relevant process?

Informal, Frequent and Brief
More frequent and less formal touch points throughout the year are critical to meeting the needs of today’s corporate culture and workforce. In addition to frequency, brevity seems to be attractive to both managers and employees burned out by lengthy, bureaucratic forms. Key to this shift is a renewed focus on the critical relationship between managers and employees. According to Gallup, 70 percent of an employee’s engagement is dependent on satisfaction with their manager. At a time when unemployment is low and top talent is hard to come by, strengthening communication between managers and employees and demonstrating empathy has never been more important. That’s something that the annual performance appraisal simply
doesn’t accomplish.

The name “performance appraisal” has an intimidating ring to it. It highlights the hierarchical nature of the conversation. Why not shift the focus to something that is more representative of the actual objective? Call it a Career Road map or an Employee Development Plan, which emphasizes the individual nature of engagement.

In addition, workforce experts have universally concluded that the practice of ranking employees on a fictitious bell curve is dated at best if not destructive.  A system that requires managers to classify a broad cross-section of staff as average overlooks the differentiators that constitute their potential.  Instead, let managers do their own benchmarking when pay increases are in the offing, rather than making them force-rank employees during a performance appraisal.  

Set Goals
There is still a need to set goals. However, they should be fluid and frequently updated—quarterly at a minimum. Managers and employees should both strive to get to know one another well enough that any engagement challenge or necessary change of course can be brought up and openly discussed. This means that the onus for initiating check-ins is shared, and accountability is mutual.

Quarterly Milestones
You may be wondering exactly how to replace your annual performance reviews with a less formal, vastly simplified framework. Sanborn Head and Associates, a NH-based consulting engineering firm, and Beacon Communities, a Boston-based property development and management firm, have implemented a quarterly check-in process in lieu of traditional performance appraisals.

During the first quarter, managers take 30 to 45 minutes to learn the employees’ work preferences. Who works best together, and why? Who likes public recognition, and who might be embarrassed by it? Who is quick with an opinion, and who is more contemplative?

Preferences like these may change over time, but they have a real impact on individuals’ performance and engagement in their jobs. Sanborn Head and Beacon leveraged the Engagement Accelerator (eeaccelerator.com), a 13-question online assessment, for this purpose. The tool provides a snapshot of work preferences along with talking points for managers.

Alignment is the focus of the second-quarter check-in. An engaged employee is aligned in three areas: how much they like the job; how good at the position they are; and whether the job function is valued or needed by the organization. Using a simple Venn diagram (see below), employees are asked to illustrate their perceived degree of alignment. This is a friendly, non-threatening way to broach the topic of job fit.

In the third quarter, conduct a stay interview, which provides the opportunity to make changes to an individual’s job before they become a flight risk. (Exit interviews are common. But like performance appraisals themselves, they rely on trailing indicators.)

Typical stay-interview questions include “What is one thing you most enjoy about your job?” and “What might make you consider leaving?”

The fourth quarter check-in should focus on development goals and overall engagement. What were the employee’s three main accomplishments from the past year? If goals have been set during prior conversations, don’t hesitate to re-assess them in the light of shifting priorities.

If you choose, you can use this meeting to set additional development goals, like cross-training, mentoring or completing a degree. Remember that these too should be re-evaluated as necessary.

An End to the “Blizzard of Paper”
One of the benefits of an overhaul of the performance evaluation is that it removes many of the arbitrary strictures that make the process so arduous for managers and HR alike.

Moving away from the traditional performance appraisal model means that managers are no longer collecting data for a massive file on every individual. Instead, the new model should keep documentation light and digital. A series of more frequent, less time-consuming, and more targeted meetings fosters clear dialogue among teams. It recognizes that engagement is not a fixed state, and performance is not a series of boxes to check. It’s time for organizations to graduate from the “tried-but-not-really-true” to a new and more effective paradigm.

Bob Kelleher is president and chief engagement officer with The Employee Engagement Group in Woburn, Mass. For more information, visit employeeengagement.com.

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