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Are annual performance reviews a relic of the past?

12 Feb 2020

Nick Deligiannis, managing director of Hays Australia and New Zealand, advises on how to keep performance reviews fresh and relevant.

Are annual performance reviews as dead as the dinosaurs? This question has been playing on the minds of HR departments around the world for quite some time. It’s safe to say that the practice of strategic performance management is shifting, with some organisations taking more of a lead than others.

GE, for example, famously abolished annual performance management reviews, while other, more modern companies such as Google and Apple never deployed them in the first place.

Speaking with Hays, Charmi Patel, associate professor in international HR management at Henley Business School, told us that “there has been a massive change from traditional performance appraisal systems to new strategic performance management”.

It’s a move that has gained momentum since 2015, according to Patel. So which changes should you know about, and could you incorporate them into your performance appraisal strategy?

Make feedback more regular

The effectiveness of having an appraisal with an employee just once a year, with little to no feedback in the interim, is being called into question, with many organisations switching this practice for more regular feedback sessions.

A recent survey conducted by Hays of 1,516 people across Australia and New Zealand found 67pc of managers prefer another form of feedback. Most agreed that some form of annual feedback is still important in order to celebrate the year’s successes, but that other more regular feedback must be provided too so that areas for improvement are addressed as they arise.

This allows an employee and employer to change behaviour before it becomes embedded. Performance and productivity improve because feedback isn’t held off for the annual review, and managers spend less time managing issues that could have been avoided.

See it as a coaching session

Performance management also needs to be based on the concept of coaching, according to Patel.

“Sit down three or four times a year to consult and coach the employee to achieve their goals. It’s more about finding the resources for the employee so they can then figure out the process themselves, which is what coaching is about,” she said.

Give staff a voice

Staff must also still have a voice in the process. From a staff engagement perspective, as well as for the sake of meeting personal goals, it is important that feedback sessions are two-way discussions where individual team members feel they can ask questions and gain help if needed.

Make it motivational

One of the real benefits of having regular feedback sessions is that employees get motivational boosts throughout the year. Without regular feedback, team members can feel undervalued following a good piece of work.

As Carol Atkinson, professor of HR management at Manchester Metropolitan University Business School, told us in the Hays Journal recently: “It can be very motivational to be praised and to know you’re doing well, and that drives positive attitudes like engagement or commitment, which again feeds into better performance.”

Be clear about the bigger picture

During the meeting, managers must clarify why the individual is important to that organisation, the value that they add, and how their personal goals fit with the company objectives.

Jenny Goulding, director of Agile HR Consulting, told us in the most recent edition of the Hays Journal that “performance review is about ensuring that an employee is motivated because he or she knows what the company expects, aspires to and considers as a success. The employee can then ensure that his or her efforts are in line with this aspiration.”

A regular reminder of the individual’s purpose within the context of the bigger picture, can do wonders for employee output and engagement.

Leverage technology

Some organisations now use live supported platforms to help manage goals and monitor performance. These can be complemented by broader 360-degree feedback systems, which can source feedback from a range of parties, including line managers, suppliers, customers and sometimes even peers. Apps are another new means of providing feedback to employees.

“In call centres of business process outsourcing companies, where client feedback is important, a lot of companies have some very sophisticated in-built apps which show how the employee has spoken to the client, how the client has responded and so on,” said Patel.

Regardless of the feedback process used and the technology deployed, it’s critical that it remains transparent, credible and consistent for all staff. If done properly, there is every chance that the practice of regular, two-way, more engaging performance feedback will become far more prevalent, replacing the age of the annual performance appraisal.

By Nick Deligiannis

Nick Deligiannis is managing director of Hays Australia and New Zealand. A version of this article originally appeared on the Hays’ Viewpoint blog.

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