Thinking about ditching your annual appraisal? Think again

There are ways to make performance management more worthwhile, says Terry Gillen – but they require careful consideration

Most people dislike the annual appraisal, and its benefits are certainly questionable. Many high-profile organisations are publicly ditching their appraisal systems, and it can seem overwhelmingly tempting to follow suit, but it is worth looking at the issue more deeply before you do.

The clear operational focus of frequent, short-term reviews is supposed to encourage greater ownership by managers, and staff are believed to appreciate the more tangible goals. Unfortunately, these reviews can be dominated by managers’ short-term KPIs, leaving competencies and values (often more beneficial to the overall organisation than to individual managers) overlooked.

The short-term focus can also ignore employees’ career development, which naturally needs a longer-term focus. The biggest performance improvement problem, however, remains unaffected.

The biggest problem is that managers tend to be operationally skilled and operationally focused. Most of the time, this is absolutely essential. Managing and developing staff performance, however, require people skills and people focus. Changing the frequency of appraisal does not magically make managers more skilled at, or more enthusiastic about, developing staff performance.

There are a number of ways HR professionals can begin to address this:

1. Integration

Appraisals need to ‘synchronise’ with other processes such as recruitment, induction, promotion and career development, so they are each strengthened by mutual support.

2. Tailoring

As organisations differ, so should their appraisal processes, but when you look at vastly different organisations you see suspiciously similar appraisal processes. This is because of the tendency to copy ‘best practice’ or to buy off-the-shelf software. Why not begin the tailoring process by asking ‘what do we want managers and staff to do that they will not do without an appraisal process?’

3. Frequency

Performance improvement in just about every aspect of life is easier with short-term goals and frequent reviews. In most jobs, monthly is probably the minimum frequency to consider (an annual ‘round up’ can address career development). To be effective, however, reviews require the right skills.

4. Skills

Few managers are skilled at two crucial people skills – feedback and reflection. Neither are most managers people-focused. Yet these vital skills are relatively quick and easy to learn and there are frequent opportunities to use them. When you pitch them as management skills rather than appraisal skills, managers are more likely to perceive them positively and use them regularly.

5. Marketing

If users are to perceive appraisals as attractive, they need skilled marketing. If you do not have a marketing department, use an agency. You can even link appraisals to a major corporate goal or other organisational priority. Isn’t that better than allowing them to be perceived as ‘HR bureaucracy’?

6. Ownership

The process needs to be transferred from HR to users. You can do this subtly, for example, by letting appraisals come from senior managers (even if its administration is quietly outsourced to HR), allowing different functions to fine-tune it, allowing users to keep most of the documentation (surely HR only needs a small summary) or renaming it – calling it ‘one to one’, ‘performance coaching’ or any other accurately descriptive name.

We know that employee engagement correlates with high performance. Further research identifies the quality of interaction between managers and their staff as the biggest single impact on employee performance. The CIPD’s competencies for enhancing employee engagement describes 11 ‘engagement competencies’, seven of which relate to managers’ performance review skills.

When you tailor appraisals to the quality and frequency of manager-staff discussions, you will move closer to achieving what you really want from them. And there are even more benefits. The quality and frequency of manager-staff discussions affect an employer’s brand and its ability to retain talented people. And those discussions can even affect employees’ job satisfaction, stress levels and well-being.

These are powerful possibilities that could be easily missed if you simply follow the fashion and ditch the annual appraisal. It’s time to think about the issue more deeply.

Terry Gillen has written many CIPD books, trainers’ resources and videos on performance management. His latest book is Great Appraisal