The appraisal has been a long time in dying, but is it actually dead?

According to the Harvard Business Review, executives first started to query the utility of the appraisal as far back as 2002.  Other companies began to look at their appraisal processes with a prime example being Deloitte, whose annual appraisal process allegedly took 1.8 million hours across the firm to complete.  Other big names followed suit such as Adobe, Accenture, Dell, Microsoft, PwC and IBM with each changing the way it appraised its people, which has prompted some to suggest that the appraisal is dead.  Arguably the nail in the coffin was from General Electric (GE), who once lead the way in using performance reports to rank and yank employees, when they decided in 2015 to ‘kill its annual performance review after more than three decades’.

A poor appraisal process.

So, why jump on the ‘Bin the Appraisal Band Wagon’? 

There are four major reasons why you should to ditch your old appraisal process:

Firstly, the old appraisal process was focussed on an annual event and generally linked to an annual bonus reward.  This tended to focus both employees and managers on the immediate period prior to the process, forgetting the work completed earlier in the year.   These rather sharp tugs on the tiller tended to be too dramatic and come too late to alter behaviour.

Secondly, the outcome of the old appraisal was focussed on annual bonuses and tied to ranking – the higher ranking and classification as an A player (top performer) would be rewarded with a higher annual bonus; while the lowest ranked C players would at worst face the sack.  This very resource-based view of people was perceived as being negative has also caused a move away from resource based terminology, where HR managers have more positive titles ranging from People Operations, Employee Experience Officers, Director of Employee Engagement to even Chief Happiness Officer or Vibe Manager!

The appraisal process was predominantly subjective and one way – the report was delivered by the manager to the employee with little or no opportunity for comeback.  Unsurprisingly, managers hated giving bad news – especially in companies that used forced ranking, so negative comment was omitted in favour of bland reporting.  Certainly in the British Army, it was always key to understand what recommendations were not written in your report, or how they were qualified by the key words – could, should or must.

Finally, it is not clear whether appraisals are beneficial.  A 1996 study suggests that feedback interventions resulted in improved performance on average in only 41% of cases, while it caused decreased performance in over a third.

A good appraisal process.

Have appraisals been ‘thrown out with the bath water’?

Appraisals have not disappeared, they are still being done albeit in a smarter more educated manner.   Why?  The reality is that they are a critical part of managing the human resource (let’s call a spade a spade…).

So how have appraisals changed?

The greatest change is that the appraisals are being conducted more regularly with ‘check-ins’ that permit an individual’s behaviours to be corrected early if needed, or areas of development addressed, while they still can make an impact.  It will be interesting to see whether Deloitte’s analysis of far more, but shorter reports will cut their 1.8 million hours spent on the appraisal process.

The second major change is the focus of the appraisals.  Since they are more frequent, they can focus on goals, objectives, career development, and strategies for improvement, rather than an annual comparison to their peers.  This chimes with the alleged desire of the millennials to have continuous professional development, career growth and clear communication.

By having more frequent discussions, the check-ins are also assisting in the management of poor performers.  Too often problem employees were allowed to drift until their annual appraisal, which would then be contested.  The more frequent and development focused appraisal systems can be more coaching in style, which is more likely to have positive results than an annual ‘yank’.

Interestingly, employees wish to retain performance ratings.  Facebook conducted focus groups and a follow-up survey with more than 300 people, which found that 87% of people wanted to keep performance ratings.  The alternatives that have been used are seen as less transparent and more likely to be based on a manager’s biased and subjective views.

Conclusion – So, long live the Appraisal?

Absolutely – but only where the process is open, transparent, and fair:

The setting of SMART (Specific, Measurable, Attainable, Relevant and Time based) at the beginning of the cycle, focused as much on how the individual’s objectives fit with the company’s mission and goals, as well as how they can be developed for their personal benefit as well as that of the company.

Regular ‘check-ins’ with the employee permits the manager to coach the employee on their progress, achievements and development – this does not need to always be formal and a chat over a coffee is likely to have greater benefit than a formal office appointment.

Why should bonuses be an annual occurrence – why not reward your team on a monthly basis?  If employee engagement is key to your company, which is more likely to be beneficial in the longer term?

Finally, the appraisal should be the basis of what Professor Denise Rousseau, Professor of Organizational Behavior and Public Policy calls I-Deals or Idiosyncratic Deals which individuals bargain for themselves for flexible working or developmental opportunities.