October 22, 2015

Performance appraisals

Performance appraisals have come in for some pretty hefty criticism in the past few years. The CIPD/Halogen Employee Outlook survey 2014 found that three out of 10 employees said appraisals are unfair. Fewer than four out of 10 considered the process to be fair. Furthermore, one in five said that their managers failed to explain objectives and expectations effectively – yet, surely a cornerstone of a good performance appraisal is setting out clear objectives and expectations?

Organisations have been performing better at performance management since, according to the latest CIPD/Halogen Employee Outlook survey, but there is still plenty of room for improvement. In the 2015 survey, 44% of the 2,226 employees polled said they were set clear objectives. However, only 19% said their performance was explained in the wider context of contribution to the organisation. And a total of 18% received no feedback of any kind at work.

Many managers don’t think much of the review process either. A survey by Deloitte found that more than half of its executives did not think that employee review system drove employee performance or engagement.

The findings of these reports will not come as much of a surprise to employees or their managers. Or even, probably, to many of the HR departments that oversee them. In the past few years, a number of high profile companies have announced the abandonment of their employee appraisal systems – Microsoft, Adobe, Gap, Accenture and Deloitte, for example.

These organisations say the annual model is out dated and doesn’t benefit organisations or individuals. Critics of annual appraisals say they smack too much of an older style of management that is top down, overly obsessed with ratings and too focused on looking back, rather than looking forward.

Moreover, there is research that shows that when done badly, performance reviews actually cause more harm than good. Psychologists at Kansas State University carried out research into how employees respond to feedback in 2013. It found that the majority of the 200 plus employees surveyed disliked performance reviews. And negative feedback could produce negative results – rather than spurring employees on to perform better, it made them feel negative about their workplace and their role there. Other pieces of research show that younger generations – Gen Y and Z – don’t react well to negative feedback, even when it is being given constructively.

The CIPD/Halogen report showed that just 27% of respondents like the rankings or ratings system. There was a strong preference for performance being assessed on an individual basis by line managers instead.

The question is ‘If performance reviews are on their way out, what are organisations doing instead?’ The move is towards more informal, regular feedback sessions, initiated by managers and employees. Adobe encourages employees to have what it calls check-in conversations with their managers.

Research shows that this is what employees want, particularly those younger generation employees. So much is done now in real time, why not career and performance conversations with your manager as well?

In this fast-moving, constantly evolving world, why wait a year to give feedback to employees? Why only evaluate progress, set new targets and review old targets once a year?

There’s a lot to be said for performance management that is ongoing, regular and on demand.