The recent announcements that annual appraisals will no longer form part of the performance management processes at Accenture and Deloitte came as a surprise to some. GE’s decision to end forced rankings, another stalwart of traditional HR practice, similarly shocked some. I sense five reasons for giving consideration to extending the sunset of annual performance appraisals to your enterprise.
- In our increasingly agile world do annual appraisals encourage the flexibility your organisation needs from either client or staff development perspectives?
- To what extent do your appraisals of individual performance promote the collaborative performance that you need to succeed in your marketplace?
- In most organisations, the annual performance appraisal process is “owned” by HR departments and this can cloud line manager’s responsibility for managing the performance of the people in their teams.
- I have yet to see any really persuasive evidence that the business benefit of delivering effective annual appraisals is greater than their opportunity cost.
- Sayings such as “people join organisations and leave Managers” (see for example http://www.gallup.com/businessjournal/523/how-managers-trump-companies.aspx) testify to the importance of line managers rather than performance appraisal systems in the retention and development of people.
What would I do instead of Annual Appraisals?
- Invest more in training Line Managers. In some cases this may need to start with helping line managers to manage themselves. Then develop their skills in communicating objectives and giving feedback. Set a clear expectation that this should be at lease weekly rather than an annual event.
- Prioritize being a role model and ensure that your subordinates do likewise.
- Put more effort into communicating. John Kotter, the Change Management expert, has called for focusing on a “big opportunity” that is explained to employees in words that are emotionally engaging and that paint a picture of a prosperous, winning future. “It is related to vision and strategy in a very straightforward way: a strategy shows you what you need to get to a vision; a vision shows you what you will be doing if you get to, and can capitalize on, a big opportunity.” The “efficienarta diamond” can help improve the line of sight between the vision and strategy and the individual efforts we are expecting from people.
- Think deeply about the people on your team. I believe that it is helpful to think about your people in a number of different “dimensions”, as you consider potential actions to improve commitment and engagement. As an aid to better understanding your people you may like to consider where you assess each of your key people are on the following five dimensions:
A. Length of Service
As a gymnastics coach in my youth, a frequent challenge was to help performers rise above “plateaus”. This involved a mix of raising technical skills and giving them the confidence to raise their performance to the next level. For example adjusting a gymnasts technique so that they achieved more height in a backwards somersault, as a prelude to introducing a twist into the somersault (which would generate the performer more points for difficulty and risk). This was achieved most consistently by taking the performer through a sequence of development steps to give them the confidence to “go for it”. A skill was identifying those with the potential to rise above the current performance level and then form a programme of actions to exploit that potential. Applying this approach to the talent in your enterprise – who do you have that is operating at a plateau, but has the potential to contribute more? Should you consider them for a move to a new role, for a training course to raise their skills, or can you involve them in a special project?
B. Personal Ambition
Taking this thinking a stage further, consider the level of ambition that each employee displays. Then ask whether the individual`s level of ambition is realistic and if so whether it is being adequately “fuelled” by you and your colleagues. Do you have any individuals in segment A (above), that have particular development needs to raise their current level of performance, or perhaps coaching to better align their ambition and performance?
C. Future Potential
How much potential does each person on your team posses? It can be helpful to think of future potential as a combination of ambition and a personal engine to propel the individual along the journey towards the ambition’s destination. Is there a mismatch between current performance and future potential? If there is, how can you help the individual to close the gap? Are the people in Segment A gaining sufficient personal satisfaction to be fully committed to your enterprise?
D. Value to the Enterprise
Plot a cross section of your people onto this graph. Do you have people in Quadrant A that need a performance improvement plan or potentially a move out of your enterprise?
E. Individual Satisfaction
Do you have people who are contributing great value to your organisation that are not gaining individual satisfaction from their work? Those who are in the area shown as Box C in the graph are at particular risk of moving to new employment since they “feel” the benefit of some satisfaction. You might like to consider special projects or other responsibilities for people in this category to raise their level of satisfaction. It would also be prudent to consider succession plans in particular for people in this group and those in category A. Finally consider what impact people in category B are having on the rest of your employees and seriously consider whether they have a future in your enterprise.
5. Establish a meaningful dialogue with each of the people you are directly responsible for can flow from
A. The insights on your people that you have gained – including their interests and commitments away from work.
B. Your understanding of your enterprise strategy and in particular the strategic themes driving your goals and objectives. Developing Strategic Themes is an area of focus in the Finally, seek opportunities to better align the interests of your people with the areas you need developed in your enterprise.
Please contact me if you would like to discuss any of these ideas further.
 Kotter, J.P., 2014b “Forget the Strategy PowerPoint”, HBR Blog Network, [22 April 2014]. Available From: https://hbr.org/2014/04/forget-the-strategy-powerpoint/