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A traditional performance management system uses annual appraisals for each individual employee. Annual performance management can be highly stressful experiences for both the employee and their manager. While employees are under pressure to present themselves well, managers have the difficult task of carrying out appraisals without causing too much disruption to daily tasks. Managers also have to hand out promotions and tough feedback in such a way that it doesn’t stoke resentment and division. Yearly appraisals and reviews can lead to inaccurate assessments as employees may feel the feedback is one sided or doesn’t reflect the work they have done throughout the year and is based only on recent actions. Even if you manage to get a reasonably accurate picture of your employees’ performance, a traditional performance appraisal system may leave both the parties unsatisfied. The principal reasons for that dissatisfaction are the effects of unilateral feedback and the absence of continuous performance management.
Carrying out appraisals annually is not enough. This can lead to a low performing employee to be unaware of their errors for an entire year. This can have a highly negative impact on business. In the absence of timely interventions from the manager, not only will the low performance continue but is likely to have a negative effect on the morale of other employees.
Lack of timely feedback prevalent in traditional performance management allows problems to remain unattended and grow. This can impact even well performing employees when they don’t receive timely intervention in some instances.
Traditional appraisals are often carried out with standardized forms and rely on the manager to make a subjective assessment of their employee. This can expose them, and the business, to decision making based on personal preference and bias. Despite their best efforts to remain objective, they are susceptible to accusations of bias, when people feel they were treated unfairly.
An annual appraisal system by design can lead to low levels of employee engagement. This is partly because the feedback is provided once a year and partly because such a feedback doesn’t provide timely inputs for performance improvement. Without alignment between individual workers’ goals and company goals, employees can become disengaged with the organization. You need to develop a performance management tool to help with goal setting.
An important objective of feedback is to identify development needs of members of staff. Therefore, employee development can quickly become stunted if employees don’t have regular feedback. With no objective means of knowing how well they are performing; employees are unable to improve performance.
Another drawback is that minor problems, which could easily be fixed, grow and become entrenched, making them much harder to fix by the time of the annual appraisal.
All of this means that targets can easily be missed while timely feedback and intervention could have easily prevented that. Without being monitored regularly, staff can let targets slip, hoping they can make up the extra work in time just before their review.
There are many problems and negative consequences of this form of ‘once a year’ assessment. So, what is the best way to do performance management?
The science of performance management and technology has progressed significantly and the traditional annual appraisal system of performance management can now be consigned to history. Thanks to the development made by technology, data processing, and communication technology, we can leverage the science of performance management. This can be used to create systems that provide businesses and employees with timely, objective feedback that can remove/reduce bias. Daily or even hourly productivity can be measured and analyzed in real time allowing us to give continuous feedback. This means employees will know in what aspects they are excelling and in which they are under performing. This knowledge allows small adjustments to be made in time that can correct the course of an employee’s performance and thereby business performance.
Management appraisals can only offer a limited view, as manager cannot be involved in every daily operational task. To enhance your appraisal system, consider incorporating 360-degree feedback. This requires co-workers to provide anonymous feedback on the people who work around them. Using 360-degree performance evaluation can help give you a well-rounded view of your employees.
Modern performance management and appraisal systems allow individual employees to be given set targets and goals in alignment with the overarching goals of the company. By doing so, each employee can see how their role contributes to the overall success of the team and organization. This type of goal management will make them take ownership of their responsibilities, increase a sense of belonging, and improve levels of employee engagement.
Using technology to capture data and perform data analysis allows creation of more efficient systems of appraisal. It is important to research and purchase the best performance appraisal software for your business needs. Once you have set up a performance management system that measures productivity, collects data relating to KPIs, and has aligned goals for employees and the company, the data is available almost real time and regular reviews can be held. Monthly or quarterly reviews allow a constant view of all data and the collection of qualitative information to enhance that. Employees can easily understand the rationale behind management decisions on promotions, and pay rises that are based on objective data. This removes perception of bias and facilitates increased motivation.
All in all, a modern continuous feedback-based Performance Appraisal system empowers organizations to not just align employees to the larger goals of the organization but also provides an effective mechanism of employee development. While this may not be panacea for all employee problems, if done well, it has the potential to reduce the friction in the performance appraisal process and improve the overall organizational performance.
Annual performance reviews are outdated and not fit for purpose. A modern business requires regular, data driven feedback. Following are a few important points you should consider while aligning your Performance Management to the best practices.