Death of the Performance Appraisal?

A growing body of data suggests that the traditional annual or twice-yearly performance appraisal may have outlived its usefulness. Today, information is both transparent and instantaneous, goals are mutable, and organizations of all kinds are ditching the paper trail.

The problems with performance appraisals are wide-ranging. Not only do they frame the conversation in a way that underscores the power differential, they place the burden of “policing” the process on managers. They have also been more focused on the past than on potential; a yearly or twice-yearly conversation is always dependent on trailing indicators.

Perhaps more tellingly, goals set in January are subject to change as new organizational priorities emerge. In a best-case scenario, what often happens is the manager must give the employee he or she is reviewing a “mulligan” of sorts, because the goals are dated. Then, the goals are either abandoned or simply pushed into the next review period with little revision.

So how can we evolve toward a more efficient and relevant process?

From Dreaded, Outdated and Ineffective …

The problems with performance appraisals are wide-ranging — and widely acknowledged. Historically, both managers and employees dislike them. The process itself is structured to emphasize the relative level of power of the participants, plus, as stated above, they place the burden of “policing” the process on managers (and on upper management and HR, who “police” managers by chasing down delinquent forms). They have also been more “rearview mirror” (focused on the past) rather than “windshield” (focused on plans to develop employees’ skills and engagement). But leaving aside the fact that many organizations’ annual review processes are perceived as cumbersome at best and a waste of time at worst, do they have real value in driving performance? Over the past several years, the answer seems to have become “no.”

If we acknowledge that the dynamic nature of today’s workplace has rendered performance appraisals ineffective, how can we evolve toward a more applicable and less onerous process? One answer may lie with the work preferences of the workplace’s younger generation.

… to Informal, Frequent and Brief

It’s been frequently noted that millennial workers thrive in environments that offer frequent, broad feedback, rather than the usual yearly “deep dive.” While it may be tempting to characterize this preference as a generational quirk, it’s important to bear in mind that, while older cohorts might expect a traditional performance appraisal, that doesn’t necessarily mean they wouldn’t also benefit from more frequent and less formal touch points throughout the year. In addition to frequency, brevity seems to be attractive to both managers and employees burned out by the same old lengthy, bureaucratic forms.

Key to this shift is a renewed focus on the critical relationship between managers and employees. According to Gallup, a whopping 70 percent of an employee’s engagement is dependent on satisfaction with his or her manager. Now more than ever before, “people managers” who exhibit empathy and truly get to know their employees are in high demand. In fact, a Kenexa global study reports that the No. 1 driver of organization-wide employee engagement is caring about the well-being of employees. Strengthening communication between managers and employees has never been more important. It is a necessary step in demonstrating empathy — something the once-a-year performance appraisal simply doesn’t accomplish. In this new model, frequent, brief, high-quality communication is at a premium. So how might performance appraisals be deconstructed to support this goal?

Quarterly Milestones

How can companies replace their annual performance reviews with a less formal, vastly simplified framework? There are many large, well-known and resource-rich organizations that are in the process of overhauling their performance appraisal systems (including Adobe, Gap, Accenture and Deloitte) — but how do smaller companies take the plunge? Below, we offer examples that have worked for smaller organizations, including Sanborn Head and Associates, a New Hampshire-based consulting engineering firm, and Beacon Communities, a Boston-based property development and management firm. These two firms have been trailblazers in this new landscape, and have implemented the quarterly check-in process below in lieu of traditional performance appraisals.

First Quarter: Check in on the work preferences of the employees (30-45 minutes). Businesses must look at how well they know their employees? Who works best together, and why? Is there a handful of morning people and a smattering of night owls? Who likes public recognition, and who might be embarrassed by it? Who is quick with an opinion, and who is more contemplative? Preferences like these may change over time, but they have a real impact on individuals’ performance and engagement in their jobs. Many in-depth assessments are available, but these can be costly and time-consuming to implement. There are quicker, more direct approaches, such as our Engagement Accelerator (eeaccelerator.com), a 13-question online assessment that provides a snapshot of these preferences along with talking points for managers. A bonus with this type of assessment is, the employer can simply revisit these preferences the following year to learn what, if anything, has changed.

Second Quarter: Check in on alignment (30 minutes). An engaged employee is aligned in three areas: how much they like the job, how good at the position they are, and whether the job function is valued or needed by the organization. Using a simple Venn diagram like those depicted below, where each of these areas is represented by a circle, employees can be asked to literally illustrate their perceived degree of alignment. This is a friendly, non-threatening way to broach the topic of job fit. They have the opportunity to explain and note strengths, weaknesses and opportunities. This simply but effectively offers an opportunity to adjust one’s responsibilities to better leverage strengths and desires.

Third Quarter: Conduct a “stay interview” (30 minutes). Exit interviews are common. But, like performance appraisals themselves, they rely on trailing indicators. A “stay interview,” on the other hand, provides the opportunity to make changes to an individual’s job before he becomes a flight risk. Senior leadership might provide a list of five questions they want all managers to ask, or they might ask managers to choose the most applicable questions from a lengthier list. Typical stay-interview questions include “What is one thing you most enjoy about your job?” and “What might make you consider leaving?”

Fourth Quarter: Check in on development goals and overall engagement (30 minutes). The fourth-quarter check-in should focus on the employee’s three main accomplishments from the past year. If goals have been set during prior conversations, it’s important to remember that these should remain fluid. They may well need to be re-assessed in the light of shifting priorities. Managers may choose to use this meeting to set additional development goals — like cross-training, mentoring or completing a degree — but these, too, should be considered works in progress, to be re-evaluated as necessary.

An End to the ’Blizzard of Paper’

One of the primary benefits of a comprehensive overhaul of the performance evaluation is that it removes many of the arbitrary strictures that make the process so arduous for managers and HR alike. Moving away from the traditional performance appraisal model means that managers are no longer collecting data for a massive file on every individual. Instead, the new model should keep documentation light — and digital.

A series of more frequent, less time-consuming and more targeted meetings fosters clear dialogue among teams. It recognizes that engagement is not a fixed state, and “performance” is not a series of boxes to check. It’s time for organizations to graduate from the “tried-but-not-really-true” to a new and more effective paradigm.

Bob Kelleher is a best-selling author, keynote speaker, and consultant. He travels the globe sharing his insights on employee engagement, leadership and workforce trends. Kelleher is the author of the best-selling book Louder Than Words: 10 Practical Employee Engagement Steps That Drive Results; Creativeship: An Engagement and Leadership Fable; Employee Engagement for Dummies; and the just-released I-Engage, Your Personal Engagement Roadmap.

Kelleher is also the founder and president of The Employee Engagement Group, a global survey, products and consulting firm working with leadership teams to enhance their leadership and employee engagement effectiveness.

According to Gallup, a whopping 70 percent of an employee’s engagement is dependent on satisfaction with his or her manager.