Ditch the annual appraisal: 7 ways to improve performance management

SPONSORED: The old-fashioned yearly appraisal is on the wane. Businesses are finding ways to be more responsive - resulting in better performance, both individually and company-wide.

by Cynthia Stuckey
Last Updated: 31 Oct 2016

Performance management seems to be undergoing an appraisal of its own these days: last year, Deloitte research found that 70% of organisations worldwide are rethinking how they chart and review their employees’ progress.

Why? Performance feedback at many organisations is not only inflexible and impersonal, but is often relegated to a mere footnote at the end of the year, and thus divorced from wider business objectives and day-to-day actions. Despite managers implementing a host of smart and sophisticated strategies, many still wind up well wide of the target – because their core employees aren’t aligned behind them.

Brandon Hall Group found that effective performance-management practices can drive a 20% increase in retention and engagement of talent at all levels. But it doesn’t end there. Handled right, they can also make employees more proactive, more productive, more flexible – and more in sync with those strategies, even as they shift over time.

Here’s how to shake up your performance-management practices:

1. Change the frequency of conversation

Given the speed of change in the business world these days, the traditional annual appraisal is rapidly becoming outdated. The likes of GE are turning instead towards an ongoing dialogue with employees that continues year-round, with feedback and coaching that helps clarify goals and re-prioritise tasks, as well as providing visibility and accountability. This dialogue communicates clear expectations, recognises success, focuses on development and removes barriers to getting the job done.

2. Personalise it

This is no one-size-fits-all model. Traditionally, employees have been handed off-the-peg feedback and standard KPIs, only to find out five months later that the strategy has changed, and these indicators are no longer relevant. It’s actually about individuals – how they’re making progress, how they’re spending their time, and how they can marry their particular work to the changing strategy of their business unit and the day-to-day contributions they can make to support the strategy. They should be synchronising personal strengths, engagement drivers and areas of interest and expertise to achieve the business outcomes.

3. Make everyone accountable

Mutual partnerships make for a more engaging process, but our research shows that many managers feel they lack the skills to guide regular performance discussions. Train managers in coaching and giving effective feedback: they should be sensitive to where people need to be, and comfortable challenging how employees are spending their time.

4. Start at the top

Even those at the C-level are accountable – they need to be role models for other managers, and handle performance management better than anyone. The ability to coach and create ongoing dialogues are core skills at C-level, where such processes are absolutely critical.

5. Chart the journey down

It needs to be clear who’s translating your vision and strategies for employees and each subsequent level of leadership. For example, operational excellence, and what concrete actions will achieve it, needs to be communicated all the way along the employee chain. Draw a tree showing the defined objectives and how to achieve them across all functions and levels, and chart them cascading through the company – you’ll quickly be able to see whether all the links are in place. Look for gaps: has anyone translated how to support the strategy beyond the second level of management? All too often, they haven’t.

6. Keep a close eye on it

Companies often only find out too late that people have been expending their energy on the wrong tasks. It requires regular conversations to recognise and reward work efforts and to know that people three layers down from you are busy executing against the strategy – rather than heading off-piste on something potentially counter-productive.

7. Be systematic

Consider how to collect performance feedback on a regular, consistent basis. Crowd-source both structured and unstructured feedback from meetings, work-streams, action projects, problem-solving sessions and completed projects. Its real-time nature will make it more accurate and relevant, plus it will be more focused on each individual’s talents and what they need to do next, as it comes from multiple sources. Once you see how this method performs, the once-a-year appraisal will seem prehistoric.

For more details on how to shift your performance-management practices to aid your employees' development, download the full report here

Cynthia Stuckey is managing director of AchieveForum (previously known as Forum), a company specialising in developing leaders and enhancing sales performance around the world


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