Forbes: Time to Scrap Performance Appraisals?

3b1cbec1Our Summary: Companies are radically changing their performance appraisal processes moving away from annual long-cycle appraisals towards short-cycle ongoing workflows.  Annual reviews are an artifact of the past – they cause significant problems and the industry is evolving.  Many are hesitant to embrace change, and the article offers some guidance, which is primarily focused on employee/goal-centric view with regular feedback loops.

Our opinion: we agree and consider ourselves to one of the pioneers in short-cycle live-360 appraisal process systems.

Time to Scrap Performance Appraisals?

By John Bersin

Something big is going on. More and more companies have decided to radically change their performance appraisal process.

Last week at our research conference we spoke with Adobe, Juniper, Kelly Services, and a variety of other companies who have decided to do away with traditional performance ratings and dramatically change the annual appraisal process.

Our research shows that this is a strong and positive trend.

Why the process must change.

Why do companies have annual reviews in the first place? They are an artifact from traditional top-down organizations where we had to “weed out” the bottom performers every year. By forcing managers to rate people once per year we can have annual talent reviews and decide who gets more money, who to promote, and who to let go.

Coupled with the performance rating is the “potential” rating, which tries to capture an individual’s potential to move up two levels in the organization (the traditional definition).

This approach is based on a philosophy that “ we cant totally trust managers” so we’re going to force them to fit people into these rating scales. And in many companies (around 20%) there are forced distributions, which mandate that some percent of employees are rated at the bottom and only a limited percent can be rated at the top.

The well publicized problems with this process abound. These include:

  • Employees need and want regular feedback (daily, weekly), so a once-a-year review is not only too late but it’s often a surprise. Regular coaching is the key to alignment and performance.
  • Managers cannot typically “judge” an entire year of work from an individual at one time (imagine if your spouse gave you an annual review!), so the annual review is awkward and uncomfortable for both manager and employee.
  • Manager-employee relationships are not 1:1 like they used to be. We work with many leaders and peers during the year, so one person cannot adequately rate you without lots of peer input.
  • While some employees are a poor fit and likely are poor performers, these issues should be addressed immediately, not at the end of the year.

To read the full article on Forbes, please click here.

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