Employees’ on-the-job performance has an outsize impact on the company’s performance. Because of this, companies are always looking for better ways to motivate and develop their people to perform at their best. Some 30% of HR professionals say that performance management will be a top priority at their firm in the coming year. As a result, the last few years have seen a big rethink about performance management processes in many leading global companies.
Annual performance appraisals
Traditionally, companies use performance appraisals to evaluate employees and allocate rewards. This once-a-year exercise involves each manager rating their staff against individual goals and competencies set at the beginning of the year. At the end of the exercise, a numerical score is calculated and plotted on a Bell curve to separate the top, middle and bottom performers. Companies then award performance bonuses to top performers and those at the bottom are placed on performance improvement plans (or simply let go). This stack ranking approach was popularised by General Electric (GE) in the 1980s and 90s, under their celebrated CEO, Jack Welch.
Performance ratings were used as early as 230 AD in China, where an “Imperial Rater” would grade members of the official family on a nine-point scale — often amidst accusations of bias and favouritism. The performance appraisal, as we know it today, was created for the Industrial Age, when each worker’s role could be clearly defined and manpower was plentiful. However in the present Digital Age, the use of annual appraisals to manage performance has come under scrutiny, particularly in the last few years. Employees today are expected to adapt to dynamic job requirements and ever-changing tasks. This makes it difficult to accurately define individual goals and measure their achievement 12 months later. Furthermore, with talent in short supply, companies realise the need to develop their human capital instead of simply “ranking and yanking” poor performers.
Furthermore, traditional performance appraisals tend to focus on individual accountability, and stack ranking has the nasty side-effect of pitting employees against one another. These work against the spirit of teamwork, which companies are more heavily reliant on these days to achieve business objectives.
During the annual appraisal, managers are expected to give developmental feedback to their staff. But who likes receiving feedback in December about something you did wrong in January? This will evoke a great deal of unnecessary tension and defensiveness between supervisors and their staff. (“That’s not how I remember that incident” or “Why didn’t you tell me this earlier?”) It is unsurprising that both supervisors and subordinates dread the appraisal process, yet up to 72% of organisations still conduct annual appraisals. At a time when most companies are facing a challenge retaining talent, this could inadvertently become a nub of dissatisfaction that drives employees away.
As pointed out by the Harvard Business Review, the biggest limitation of annual reviews is that they hold people accountable for past behavior, at the expense of improving current performance and grooming talent for the future.
Champions of the traditional performance appraisal like GE have now ditched it in favour of another more progressive way of evaluating performance and developing employees. They have been joined by global companies like Adobe, Dell, Microsoft, IBM and Gap. Accenture, the giant consulting firm, has disbanded rankings and annual evaluations for its 330,000 employees. In fact, 70% of multinational companies are moving towards replacing annual reviews with new approaches to employee development.
Continuous feedback
One of these new approaches is the use of continuous feedback. This involves asking colleagues for feedback on a recently-completed task or project. These colleagues could be managers, peers or even subordinates working on the same project and are familiar with the employee’s performance. The feedback should minimally include answers to these two questions:
1. What is one thing [name] did well?
2. And what is one thing [name] could improve upon?
Employees should request for feedback immediately after the event, while the memory of it is still fresh in everyone’s minds. Respondents should be encouraged to give honest and constructive feedback, to help their colleagues to improve their future performance. Continuous feedback is therefore forward-looking and development-focused.
Managers can see the feedback and use it to form a 360-degree view of the employee when assessing their overall performance.
Since the objective of continuous feedback is to develop the employee, it is also important to set follow-up actions in response to feedback, and have regular check-ins with managers to ensure they take place. After all, we wouldn’t want all that valuable feedback to disappear into a black hole!
This process may sound nice in theory, but the proof is in its implementation. This can get tricky, since a ton of paperwork will be needed to log all the feedback, responses, follow-ups and check-ins in writing. Also, faced with competing priorities at work, staff are likely to forget to do them. In short, it will be close to impossible to implement a system of continuous feedback without the help of some technology.
Performance management systems
Fortunately, a modern performance management system like Learn Anchor can take over many of the administrative tasks associated with continuous feedback, allowing employees to focus on giving constructive feedback to each other.
Learn Anchor enables staff to request for feedback from colleagues with just a few taps on their phone. Respondents receive a prompt in their email and respond with their feedback. When employees read their feedback, they can enter their responses, and set follow-up actions and due dates. Learn Anchor sends everyone reminders to move the process along.
Managers can see all the feedback given to their staff, and use it to coach and develop them. This feedback can also form a qualitative assessment for managers to use when they are deciding on performance bonuses, promotions or job reassignments. They no longer need to seek out comments from various line managers to assess performance of their staff.
Learn Anchor provides feedback reports and statistics for HR and management, like which employees are the most active requesters or providers of feedback. In the future, we may conduct further analysis of the feedback for sentiment and predictive analytics.
Customers can still choose to use the familiar performance appraisal with Learn Anchor, with or without continuous feedback. Employees and their managers can set performance goals, competencies and KPIs, and evaluate against them during performance appraisals.
Learn Anchor is a comprehensive human capital management system that can generate productivity and process benefits to organisations of all sizes. Click on the button below to find out more about Learn Anchor and sign up for a free trial today.
