Posted in: Bloggery

Sorry if my heading here sounds a bit like the war cry of a terrorist – but why has the movement to abandon annual performance appraisals taken so long?

There probably is no more emotive and laden phrase than:  “Let me give you some feedback..”  Following closely behind this is “ May we discuss your performance in our annual review process next week…?”   These are such strained, artificial events, especially if the giver of such unwished for feedback has a few serious flaws of their own!

The best way to give and receive advice about doing something better is in the moment, briefly and with empathy.  It can ideally take the form of a couple of questions to draw out some self-insight:  “How do you think that went?”  (referring to a report, a presentation or an action of some form).  And, “Is there anything you would change to get something like this across the line another time?”  “Let me know if I can help you on this…”  or perhaps:  “You might like to look at how XXX handles these things:  I admire her skills in this work..”

Why then have HR leaders and many CEOs persisted with clunky, horrible, unnatural bureaucracy and policy in this area for so long?

In one large bank we worked with some time ago, it seemed that as much as two month’ s time was wasted in the HR function managing the annual performance process across the organisation.

In this case, another error was being compounded:  the rigid linkage of performance appraisals with performance payments.

To me this just never works!  It is one thing to have an outcome based short-term incentive plan, and maybe a separate long term incentive program to provide an additional layer of reward if required in a particular market.  However if there is a tight linkage with performance appraisals the pressure this linkage puts on performance appraisals is often acute and leads to a totally contaminated process.

There are sometimes instances when high – perhaps long serving – performers need strong acknowledgement but small salary increases to keep them within an approved salary range.  There can then be instances when individuals with great potential need a tough appraisal focusing on areas to improve to land that next promotion, and yet a high salary increase linked to their retention.  Development coaching and guidance should never be tied to remuneration.

With senior people and professionals, acknowledging performance and providing coaching when an inherent capability simply needs fine-tuning is a subtle, nuanced affair, best tailored to the context and the individual and delivered in the moment. Performance coaching should be about helping improve existing talents, and should engage, and foster self-insight.   Making good judgements about financial recompense, on the other hand rests upon salary surveys, competitiveness in specific job families, relative contribution, and financial capacity in a business. These judgements should stand quite separate from the process of acknowledging and building performance in individuals.

It has been terrific to read about Accenture’s bold initiative to throw out the annual performance review – and then to see Deloitte and others following suit.  How their HR people must feel with such a great weight lifted from their shoulders!