VP Sage People
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Performance management: time to ditch the annual appraisal

If you’re still relying on annual appraisals and paper-based methods of recording and tracking employees’ progress, it’s time for a radical rethink. A good employee experience relies on having an effective performance management process.

28th Aug 2019
VP Sage People
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boss conducting an appraisal meeting with employee
iStock/pixelfit

HR professionals are starting to harness new technology to streamline their processes and improve employee experience.

Performance management is an integral part of the role of HR departments, yet current practices often involve laborious annual appraisals – dreaded by all those involved.

Performance management processes, like a lot of things in the sector right now, are continuing to change as companies look to become more data-driven and run processes more intelligently.

Progressive companies are swapping out the annual appraisal for continuous conversations instead.

Additionally, more traditional approaches to performance management mean significantly more paperwork for already busy and overworked HR and people teams.

For example, one of our customers’ annual performance review process used to take up to six weeks.

Their HR team would prepare paperwork for each month’s upcoming reviews at least two weeks in advance, and then send them to stores.

When they arrived, the review had to be completed by the manager, approved, reviewed with the associate, signed and returned back to the HR team.

They would then verify wage increases and enter them manually into their systems and file the paperwork.

With reviews scheduled once a year, the triumphs and disasters of the previous year were often stale and half forgotten by the time the appraisal came around.

It’s important for employees to understand how what they’re doing contributes towards the overall company strategy and growth.

Why are companies looking at past performance when they should be planning how the employee can excel, be happier and more fulfilled in the future?

It’s little wonder, then, that some companies are ditching the annual performance review entirely – including corporate giants such as Deloitte and Netflix.

Two thirds of employees told us in recent research that being valued and recognised is the most important aspect of their work.

With this in mind, here are five ways to truly reinvent performance management in today’s changing world of work for the better.

1.  Set clear goals

People need to know what they’re doing so they can work towards a clear set of goals.

Employee engagement is best when everyone is on the same page.

Employees need to know what’s expected of them, for example what personal goals they are working towards and what timeframe they must accomplish them in.

It’s important for employees to understand how what they’re doing contributes towards the overall company strategy and growth.

2. Seek the right feedback

Collaborate with 360-degree feedback and peer recognition from people who work as a team every day on the ground, incorporating a range of feedback to minimise bias.

Make sure that feedback questionnaires are focused on key performance indicators that are directly linked to that employee’s own development goals.

It’s important that feedback is a continuous, regular process, with clear actions at every stage – including recognition and rewards for those that achieve their goals.

3. Foster a culture of self-evaluation

Employees shouldn’t be passive about their performance – if they are, then they’re clearly unengaged, and not productive in their roles.

Learning is always more powerful when the worker is invested in their own development, which is why organisations should be encouraging employees to undertake their own professional growth, set their own personal goals, and assess their progress.

Instead of waiting for someone’s review to praise them for their good work, businesses should adopt channels that allow for continuous and spontaneous feedback.

Remember, evaluation works both ways. Performance management is a great opportunity to solicit feedback from employees about what the organisation could be doing better, ensuring you can fix problems before they lead to disengagement, frustration and, ultimately, staff churn.

4. Ensure feedback is continuous

Your employees’ triumphs and mistakes do not happen to a schedule, and there’s no reason why feedback should be a fixed date in the calendar.

Instead of waiting for someone’s review to praise them for their good work, businesses should adopt channels that allow for continuous and spontaneous feedback.

Find channels for continuous feedback that are easy to use, so the feedback process is quick and achievable for busy managers. This will provide a real-time picture of performance and attainment.

5. Set actionable targets

It’s all very well setting goals for employees, but if your managers don’t follow through then you might as well not bother with performance reviews at all.

That’s why it’s so critical to ensure that every goal within an individual’s development plan has a clear timeline of when each action will be completed.

Whether you decide to replace annual appraisals with continuous performance management or introduce peer-led recognition, it’s important to keep employee experience at the core of this process.

Rather than concentrating on particular skills, you should encourage managers to focus on how each employee can build on their particular strengths and passions, and how their development will help them towards their career aspirations.

Managers should ask for updates and encourage progress, making it clear that self-development to enable your employees to progress is a priority for you and the organisation.

Rethinking your performance management

However you decide to upgrade your performance management, the important thing is that employees feel valued, understand their role and how they are performing and progressing.

Whether you decide to replace annual appraisals with continuous performance management or introduce peer-led recognition, it’s important to keep employee experience at the core of this process.

The benefits extend beyond employee experience to HR and people teams – a more continuous performance management process means less admin for them, so that they can concentrate on those all-important experiences.

Say goodbye to piles of paperwork and time-consuming processes.

Managers can now receive alerts for upcoming performance reviews, retrieve most documents they need electronically, complete the review online with a digital signature-and once evaluation scores are calculated, new pay rates are automatically sent to the payroll system.

Intelligent performance management not only ensures that employees feel happier, more motivated and clearer on what’s expected of them and their current performance, but also frees up invaluable time for HR teams.

Interested in this topic? Read Performance management: the new triple bottom line.

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