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Is the annual appraisal dying too slowly?

18th Aug 17 10:36 am

What’s your thoughts?

Recently, there has been a trend for organisations to move away from the traditional annual appraisal and focus on regular performance reviews. In 2015, Accenture ended their annual performance reviews in favour of monitoring employees progress throughout the year. Annual appraisals are often deemed as impersonal, difficult meetings that lack good outcomes, making the entire performance management process meaningless.

The annual appraisal has been likened to “throwing darts at a dartboard blindfolded and only being shown your score 12 months later.” So, why are organisations still using this method to monitor their employees?

Annual or continuous? 

A recent IDC survey, sponsored by Cornerstone OnDemand, found a substantial increase in semi-annual performance reviews, taking preference over both annual and regular reviews.

Comparing 2016 and 2017 survey results, we found a significant increase in semi-annual reviews going from 21 per cent in 2016 to 39 per cent in 2017. In contrast, regular reviews have decreased from 28 per cent in 2016 to 21 per cent in 2017 and annual reviews have decreased from 45 per cent to 40 per cent over the past year. This is perhaps an indication that organisations want relevant and frequent feedback on performance but that continuous reviews may not be suitable for all organisations and, a set time to discuss performance, like a semi-annual appraisal, is preferred.

Semi-annual appraisals appear to be a middle ground for most organisations. They have the traditional structure of an annual appraisal but can focus on training goals and development objectives as well as compensation reviews. Interestingly, there is a slight increase in annual meetings for training and development reviews (32 per cent in 2016 to 36 per cent in 2017), suggesting that organisations want to focus on longer term planning.

However, giving regular feedback will not only benefit employees but the organisation as a whole. Annual appraisals are often focussed on promotions and increases in salaries, they rarely focus on new skills or growth opportunities. Why should employees have to wait for one meeting each year to know how they’re performing? Similarly, how will both the appraiser and the employee remember every objective that they need to work on or have completed effectively from the past year?

Not only will regular reviews benefit the employee but they will keep the employer up to date with their workforce which will put them in a better position to improve workforce management and conduct helpful, productive conversations. 

HR’s role  

Across Europe, on average LOB (line of business) and HR managers meet 5.4 times per year to conduct performance reviews compared to their average of 13.8 meetings per year regarding recruitment. It is important to mention that the median number of discussion on business-related topics is only three times a year! The difference between median and average indicates that a minority of companies actually do a very good job at having much more regular discussions on business issues. One example of such a best practice is given by high growth organisations (11 per cent or more), where those discussions are much more frequent.

The lack of meetings between HR and LOB managers highlights that organisations are not implementing a continuous review process. This absence of frequent discussions between HR and LOB demonstrates the need for HR’s role to adapt and change.

Instead of holding on to the company’s traditional procedures, HR and LOB should consider re-evaluating their current structure and processes. Managers need to understand why regular reviews are necessary and acknowledge the importance of developing teams in real-time – especially for retention purposes. Whilst, HR must provide intuitive tools to help managers capture feedback and development ideas on a regular basis.

However, for some large organisations regular performance reviews are difficult to implement. Therefore, they are moving to a semi-annual review structure which is a step towards more regular check ins on employee progress. This means that companies can focus on training and development in one meeting and compensation in another. It’s good to separate the performance review from the yearly review to give time for employees to evaluate their career.

What’s right for your company? 

Even before talking about processes and frequency, the real question is: what is the purpose? We believe that business relationships, such as employment, should focus on joint success. Therefore, a performance review should target performance improvement for the immediate and long term future, not just looking at the past. This means that the structure of the discussion is not focused on previous projects, but simply takes information from past achievements to identify areas of improvement and define potential development targets.

Reviewing employee’s performance regularly depends on how the company organises their HR structure. For example, the employer could arrange meetings after their employees finish projects to review their performance. The method in which an organisation conduct their reviews is entirely up to them, but HR and LOB managers need to aid their company in managing this continuous feedback process.

It is clear that organisations are shying away from the annual appraisal and are progressing towards a continuous review process. However, with the rise in semi-annual appraisals companies are still holding on to structure and traditional methods that they feel comfortable with. Semi-annual appraisals are useful and can separate conversations on training and performance from career progression and plans for the future.

But without day-to-day feedback, employees will struggle to have the opportunity to talk about skills, their real time performance and growth opportunities. The best approach for organisations is to set out a strategy and adapt it to suit the needs of their employees.

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