The annual appraisal ritual has been re-invented. It takes in the views of equals, subordinates, and customers as well as those of your boss.
The traditional approach to appraisals did have the advantage of simplicity. It was a bureaucratic chore to be completed as speedily as possible. Every year, at an appointed hour (and often for an hour), you sat in an office with your boss. Your performance over the previous year was then discussed and dissected. If you were feeling brave you might complain about a colleague or ask for a pay rise. You emerged from the room, shook yourself down and headed back to your desk until next year.
This form of appraisal may linger on in some companies, but in a fast-growing number, the annual ritual has been re-invented. The new model appraisal tends to be flexible, continuous, revolves around feedback, involves many more people than one manager and a boss, and seeks to minimise bureaucracy.
'The traditional model usually involved a form with boxes, a talk with a manager and a final rating which was then filed away in the personnel department,' says Angela Baron, policy adviser at the Institute of Personnel and Development (IPD). 'It became bureaucratic and didn't actually improve performance.'
As Baron points out, the object of appraisal is straightforward: to improve an individual's performance and thereby improve the performance of the organisation as a whole. To do this, the appraisal has to be responsive to individual needs and must be available to individuals throughout the organisation. In keeping with this climate of flexibility, many companies now employ a variety of forms of appraisal. The range and scale used by Mercer Management Consulting is increasingly typical. 'We put a lot of effort and resources into the review process. Everything we do is about our staff's commitment and knowledge, and the change and value they deliver for our clients,' says Matthew Isotta, vice-president of Mercer's European Central Resource Group.
Mercer's appraisal process is all-embracing. There are long-established downward reviews written by partners on people working on assignments.
'You have to sit down at the end of a project anyway,' explains Isotta.
'It is a formalised way of doing so which has become ingrained in our culture.' Each partner has an adviser who takes the assignment reviews and discusses them with the individual concerned and with other managers. Then a one-page career review summary is produced outlining the individual's strengths, areas of growth and development objectives for the next six months. In addition, every six months groups of partners spend a day analysing their own personal performance. 'The review day involves 20 to 25 partners and makes the entire appraisal process transparent,' says Isotta.
Finally, Mercer has an upward review process, currently being refined, which involves an anonymous component. For the long term, the company is moving towards a survey model where everyone fills in an evaluation of people they work with every six and 12 months. The danger, warns Isotta, is that the entire system becomes merely paper generation. 'This process has to have bite. There is the risk of it being ignored so we feed it through to the compensation of partners. We don't have hard-and-fast rules, but compensation is driven by a number of factors and the upward review process is key.' Others seek to distance appraisal from rewards, arguing that appraisal should concentrate on development issues rather than becoming bogged down in pay negotiations.
Companies like Mercer approach appraisal in the more broad-ranging context of 'performance management'. This means that it must embrace issues such as personal development and career planning, in addition to simple analysis of how well an individual has performed over the last year. 'Some organisations have almost abandoned formal appraisals,' says the IPD's Baron. 'They want to escape from the form-filling mentality and instead want managers to talk continuously about their performance against agreed objectives, development needs and future roles.'
Rothmans International has developed a comprehensive career development programme for its senior managers. 'It is built around a holistic and highly personalised approach which recognises that appraisal is linked to a wide range of issues,' says John Evans, chairman of CPI Career Management, which developed the programme with Rothmans.'There are - and have to be - mutual benefits. From the organisation's point of view, the programme gives it the opportunity to liberate the potential of its employees. And the employees gain insights into what they can and can't do, where their career can go and how they can direct it.'
To the uninitiated, such talk can suggest that appraisals are mere wish lists of the skills an individual would like to acquire. In fact, where appraisal is working successfully the reverse is true. People should emerge with plans which can cover everything from the next week to the rest of their life. The emphasis on creating something from the appraisal is part of a shift towards making it a forward-looking rather than historic process.
These changes have significant repercussions for the human resources function (HR). Traditionally, appraisal fell within its domain. Its new role is mapped out by the IPD's Baron: 'The HR or personnel department will be active in the design of appraisal processes. It will take responsibility for training appraisers, the kinds of questions being asked, how people are measured and what the processes are seeking to achieve. It will act in a supporting role but the emphasis will be on working in partnership. Appraisal will be seen as a management tool which should be used by line managers.' Brian Brooks, HR director at advertising group WPP, agrees that he and his team now act as consultants. 'Human resources has an educational role concerned with the structure and use of the performance appraisal system.'
The changes in appraisal are nowhere more evident than in the fashionable enthusiasm for 360 degree feedback. This involves an individual's peers, subordinates, bosses and even internal and external customers airing their views on his or her performance, usually by way of a questionnaire on subjects including teamworking, leadership and decision-making. As methods of appraisal go, it is undoubtedly robust and rigorous and takes feedback to unprecedented levels. Its attraction is that it gives a more complete picture of an individual's performance. Different groups see an individual in a variety of circumstances and situations and can, as a result, give a broader perspective than that of a single boss. This, of course, relies on a high degree of openness and trust.
WPP has introduced 360 degree feedback at a number of group companies and Brooks regards it as a vital communication tool: 'It encourages managers to think through what the values of the organisation are and helps us to communicate clearly with our people about the identity and values of every business so there is a common language and understanding.' He identifies the management of the information gathered as central to the process: 'Most companies fall down on taking the feedback and doing something useful with it - interpreting the results and using them to develop people and the organisation actively.' At WPP the end result is three to four pages of text, in which descriptive comments are kept to a minimum. Participants receive statistics on their performance in key areas and details of how aligned people's views were. Crucially, the process is anonymous.
Research at Ashridge Management College into the growth of 360 degree feedback suggests that success requires a number of factors: a clear strategic rationale; top management support and involvement; a culture geared towards behaviours and attitudes rather than simply towards performance; sensitivity; a genuine willingness to achieve change; and a willingness to discuss any issue.
The message of such criteria is that appraisal needs to be a considered process rather than an automatic ritual. It must embrace the goals of the organisation and those of the individual in both the short and the long term. And, above all, it must be managed effectively. [BH] Forward Trust
[BH] An all-round development tool helps reinforce culture change [BX] Forward Trust Group, a subsidiary of Midland Bank, discovered 360 degree feedback in the early 1990s. 'We were designing a management programme and wanted it to be different,' says Richard Green, head of personnel.
'We had never given managers feedback, but wanted to get reports on them.
So we designed a questionnaire and started the concept. The management programme was rolled out to middle management and above, and proved to be very powerful. For many of our senior managers, it was the first time they had ever been told what people thought of them. It is a very common problem. Indeed, it is very unusual to find an organisation where there is true feedback - it is usually fudged, confused or distant from reality.
'We are changing our culture and 360 degree feedback fits in with our stated values of development, communication, respect for the individual and of motivation through encouragement. While our values are the same as many other organisations, the difference is that we mean it,' says Green.
'There were some initial misgivings but that was because we didn't communicate the programme effectively. Explaining what you do and why, allowing people to be comfortable with the process, is central.
It is a question of trust and it does, as a result, take time.'
The Forward Trust system is highly confidential. Participants receive the entire file when the process is complete. While this has helped build trust, its disadvantage is that the data is not retained. This is something the company hopes to redress through new software.
So far, of Forward Trust's 2,000 employees, 400 have received some 360 degree feedback and it is planned to make such performance analysis available to all with staff responsibilities within 18 months to two years.
'It can't be used for absolute comparisons,' warns Green. 'The key is to utilise it as a tool for development rather than assessment. If you link it to pay and rations, you will find managers pandering to their staff.'.