Performance management in the 21st Century

Many organisations like Accenture and Adobe have realised that the annual performance appraisal process no longer fits their business model and was having a negative impact on employee engagement. In the first of a series of articles, MHR’s Emma Parmar looks at why we need to ditch annual appraisals, why they don’t work anymore, what damage they cause and offers advice and guidance on how to successfully manage performance.

It is well documented that the outcome of an engaged work force has a positive impact on an organisations revenue and growth, so why do we continue to put our workforce and line managers through a costly and disengaging practice which yields no benefit to either employers or employees?

High quality employee performance is required every day, it is not an annual event, so why treat it so?

Spot the difference

Let’s take a look at the current needs from the annual performance appraisal process and then compare against the needs of performance management without the “annual” element:

The CEO needs to:

• Confirm that they have the right talent in the right roles with the required support, learning and development is in place to meet organisational goals now and in the future
• Ensure that high potentials are identified, engaged, career paths are in place, development plans are actioned and flight risk is eliminated
• Key roles and key people have solid succession plans in place to limit the damage caused when people leave the business
• Assurance that employees are engaged, that they clearly understand the mission and values of the organisation and how they directly contribute to the overall success
• Verify that employees are happy at work, that they have the right level of investment and they know that they are valued
• Validate that employees are demonstrating the organisations values and behaviours
• Have confidence in the organisations’ branding, ensuring a continuous and healthy talent pipeline
• Be assured that any underperformance is dealt with swiftly with minimal impact to operations.

HR needs to:

• Ensure that each manager and employee is trained on the annual appraisal process and documentation is completed
• Make sure that all managers actually do the employee reviews by the given deadline
• Calibrate the ratings given by managers so that they somehow fit into the bell curve
• Process employee appeals
• Provide data to the leadership team.

Line managers need to:

• Prepare assessments for each employee looking back over the last 12 months’ worth of work
• Fit the appraisals into a full work schedule and still deliver business as usual
• Figure out what feedback they are going to give each employee based on 12 months of performance
• Deliver some hard messages to unsuspecting employees
• Document a years’ worth of review for each of their employees
• Apply one overall rating for the whole year to each employee.

The employee needs to:

• Gather evidence of their contribution and successes over the last 12 months (only the positive moments - they do not want to draw attention to any hurdles or issues that they may have experienced over the last 12 months, in fact, they start to feel anxious about those incidents being raised so they mentally plan their defense in advance of the meeting)
• Plan how to raise the conversation about their career development which they have probably been thinking about for a while
• Figure out how to approach things they are not happy with such as bad management, behaviours, environments, pay, and benefits. It’s not uncommon for an employee to avoid confrontation by looking for another job instead
• Hear how amazing they are and get an exceptional rating.

The CEO needs to be assured that the management of workforce performance and development delivers the talent requirements for the organisation’s continued success.

The HR needs are actually administration processes to manage this complex and time-consuming annual event. I think it is safe to say that is not what HR professionals signed up for.

Managers need to cope with the pressure of fitting these reviews into their schedules and then complete a large amount of documentation to support the reviews.

The employees’ needs are never fully met because it is impossible to review 12 months of performance and development once per year. Quite often the objectives set in the previous year are very different from the ones the employee is currently working towards, this quickly leads to disengagement, resentment, and feelings of being undervalued or unappreciated.  

So let’s look again at the needs of performance management but this time from the angle of no annual event:

CEO needs:

• No change. They still need to be assured that talent management and development will support the organisation’s needs.

HR needs to:

• Provide quality training equipping people managers to become proficient coaches, mentors and developers of peoples’ skills
• Build and maintain a brand that attracts a continuous pipeline of top talent
• Embed the mission and values into the everyday culture of the organisation
• Develop fresh engagement practices
• Assist managers with development programmes for rising stars
• Eliminate poor manager behaviours
• Protect and retain talent, safeguarding the business against flight risk
• Assist leaders with successful succession planning
• Support coaches and mentors with personal development plans
• At any point in time provide the leadership team with an accurate, real-time workforce talent profile
• Predict potential talent risks and create a solid contingency plan. I think it’s safe to say this IS what HR professionals signed up for.

The manager needs to:

• Check-in with their employees on a regular basis
• Quickly address underperformance by agreeing a plan to success, offer support and mentoring and quickly turn underperformance into performance or escalate
• Coach people through new challenges, projects or roles
• Mentor people to become the very best they can be
• Give advice at the point it is needed
• Be open to discuss and promote career progression, even if it means a top talent moving to another area of the organisation
• Be approachable so employees can raise any concerns at any point in time
• Give praise when due
• Easily document discussions when they actually take place.

The employee needs to:

• Know that they are doing a good job
• Have access to continuous coaching and mentoring enabling them to excel
• Be able to raise concerns at any point in time
• Ask for help whenever it is needed
• Have a clear development and/or career plan if desired
• Understand the organisation goals and values and how they directly contribute to them
• Know that they are valued and when they need it help is there for them.

Managing performance is a fundamental key to the success of every organisation. Annual appraisals are not going to deliver this, a year is a long time in today’s agile society.

In 1967 what did a year at work look like for most? Stable, routine, same workload day after day. Back then an annual review of an employee’s performance worked because very little changed in a year. An overall annual rating meant something back then. Time was easier to manage too, everyone worked to rigid shift patterns and most worked at the same location every day. Organisations had more managers and managers had assistants so there was plenty of resource to prepare for an annual appraisal event.

Fast forward 50 years and the world of work has become a very different place. Technology exists to manage repeat processes. Jobs are diverse. Employees work on projects, in virtual teams, remotely and their objectives change continuously. No two days are the same. If we are to assess performance it ought to be on these bite-sized projects at the point in time, when it is relevant.

Today’s workforce needs more than just a salary from their job, they need drive, excitement, passion, pride, careers and continuous feedback.

It really is time to stop trying to fit performance management into an annual event because it no longer belongs there. It’s time to move to real-time performance management.

This series of articles Performance Management for the 21st Century will guide you through each key element of successful performance management including:

• Real-time performance management, the process
• The dangers of ratings
• Succession plan your way to success
• Talent profiling, all a CEO needs to know
• How we made bad managers, how to fix it
• Mission impossible, missions and values made simple
• Employee engagement, what you really need to do

*The cost per employee, per year to carry out an annual performance appraisal as calculated by management research firm CEB.