Large organizations , Millennials , Disruptive technologies , Global Village are all part of our ‘working’ VUCA world. How can we factor all of this and keep up with the Annual Appraisal Process , which is now driven by 360 degree feedbacks and 2 way conversations ?
We strongly recommend using Talent Assessments (especially from Pexiscore) to understand where the individual lies in his personal and professional journey from a fresher to a Leader. Where is he today – in his current role ? for the next level role ? Talent Assessments give a clear line of sight on each employee – unbiased and consistent . Couple this with the Feedbacks and you have a win – win formulae for taking the right promotion decisions.
I really like the HBR article The Performance Management Revolution, by Peter Cappelli and Anna Tavis. Peter Cappelli is the George W. Taylor Professor of Management at the Wharton School and a director of its Center for Human Resources. Anna Tavis is a clinical associate professor of human capital management at New York University and the Perspectives editor at People + Strategy, a journal for HR executives.
Quoting from the article :
Three Business Reasons to Drop Appraisals
In light of that history, we see three clear business imperatives that are leading companies to abandon performance appraisals:
- The return of people development.
- The need for agility.
- The centrality of teamwork.
1.The return of people development
Companies are under competitive pressure to upgrade their talent management efforts. Such firms are doubling down on development, often by putting their employees (who are deeply motivated by the potential for learning and advancement) in charge of their own growth. This approach requires rich feedback from supervisors—a need that’s better met by frequent, informal check-ins than by annual reviews.
Now that the labor market has tightened and keeping good people is once again critical, such companies have been trying to eliminate “dissatisfiers” that drive employees away. Naturally, annual reviews are on that list, since the process is so widely reviled and the focus on numerical ratings interferes with the learning that people want and need to do. Replacing this system with feedback that’s delivered right after client engagements helps managers do a better job of coaching and allows subordinates to process and apply the advice more effectively.
Kelly Services was the first big professional services firm to drop appraisals, in 2011. PwC tried it with a pilot group in 2013 and then discontinued annual reviews for all 200,000-plus employees. Deloitte followed in 2015, and Accenture and KPMG made similar announcements shortly thereafter. Accenture CEO Pierre Nanterme estimates that his firm is changing about 90% of its talent practices.
2. The need for agility.
When rapid innovation is a source of competitive advantage, as it is now in many companies and industries, that means future needs are continually changing. Because organizations won’t necessarily want employees to keep doing the same things, it doesn’t make sense to hang on to a system that’s built mainly to assess and hold people accountable for past or current practices. As Susan Peters, GE’s head of human resources, has pointed out, businesses no longer have clear annual cycles. Projects are short-term and tend to change along the way, so employees’ goals and tasks can’t be plotted out a year in advance with much accuracy.
At GE a new business strategy based on innovation was the biggest reason the company recently began eliminating individual ratings and annual reviews. Its new approach to performance management is aligned with its FastWorks platform for creating products and bringing them to market, which borrows a lot from agile techniques. Supervisors still have an end-of-year summary discussion with subordinates, but the goal is to push frequent conversations with employees (GE calls them “touchpoints”) and keep revisiting two basic questions: What am I doing that I should keep doing? And what am I doing that I should change? Annual goals have been replaced with shorter-term “priorities.” As with many of the companies we see, GE first launched a pilot, with about 87,000 employees in 2015, before adopting the changes across the company.
3. The centrality of teamwork.
Moving away from forced ranking and from appraisals’ focus on individual accountability makes it easier to foster teamwork. This has become especially clear at retail companies like Sears and Gap—perhaps the most surprising early innovators in appraisals. Sophisticated customer service now requires frontline and back-office employees to work together to keep shelves stocked and manage customer flow, and traditional systems don’t enhance performance at the team level or help track collaboration.
Gap supervisors still give workers end-of-year assessments, but only to summarize performance discussions that happen throughout the year and to set pay increases accordingly. Employees still have goals, but as at other companies, the goals are short-term (in this case, quarterly). Now two years into its new system, Gap reports far more satisfaction with its performance process and the best-ever completion of store-level goals. Nonetheless, Rob Ollander-Krane, Gap’s senior director of organization performance effectiveness, says the company needs further improvement in setting stretch goals and focusing on team performance.
Challenges That Persist
The greatest resistance to abandoning appraisals, which is something of a revolution in human resources, comes from HR itself. The reason is simple: Many of the processes and systems that HR has built over the years revolve around those performance ratings. Taking away appraisals flies in the face of that advice—and it doesn’t necessarily solve every problem that they failed to address.
Here are some of the challenges that organizations still grapple with when they replace the old performance model with new approaches:
- Aligning individual and company goals.
- Rewarding performance.
- Identifying poor performers.
- Avoiding legal troubles.
- Managing the feedback firehose.
In recent years most HR information systems were built to move annual appraisals online and connect them to pay increases, succession planning, and so forth. They weren’t designed to accommodate continuous feedback, which is one reason many employee check-ins consist of oral comments, with no documentation.
The tech world has responded with apps that enable supervisors to give feedback anytime and to record it if desired.
At General Electric, the PD@GE app (“PD” stands for “performance development”) allows managers to call up notes and materials from prior conversations and summarize that information. Employees can use the app to ask for direction when they need it.
IBM has a similar app that adds another feature: It enables employees to give feedback to peers and choose whether the recipient’s boss gets a copy. Amazon’s Anytime Feedback tool does much the same thing. The great advantage of these apps is that supervisors can easily review all the discussion text when it is time to take actions such as award merit pay or consider promotions and job reassignments.
Of course, being on the receiving end of all that continual coaching could get overwhelming—it never lets up. And as for peer feedback, it isn’t always useful, even if apps make it easier to deliver in real time. Typically, it’s less objective than supervisor feedback, as anyone familiar with 360s knows. It can be also “gamed” by employees to help or hurt colleagues. (At Amazon, the cutthroat culture encourages employees to be critical of one another’s performance, and forced ranking creates an incentive to push others to the bottom of the heap.) The more consequential the peer feedback, the more likely the problems.
Given this background, how can we adopt the ‘Third way – Hybrid way ‘to go about Performance appraisals, and especially, promotions and rewards which are to come out from this system ?
We recommend using a combination of Appraisals (annual or bi-annual) + Talent Assessments + 360-degree feedback (above a certain level in the organisation)
For each employee in the organisation, the Talent Assessment would take around 40 mins to 1 hour of time investment. The Manager undertakes the appraisal discussion and factors from the Assessment are graded by him too, as part of the discussion. Then these factors are used in the 360 degree feedback, which also has the qualitative comments (for sentiment analysis) .
The combination of these data points gives us :
- Objective and standardised understanding and per employee measurement of Job Competency – across all levels (Hint: Also, real time changes in the competency levels)
- Employee Potential for competency important for the next level in the organisation (Hint: Helps with the Succession Plan)
- Are the managers aligned on the factors / competency – especially useful within large teams or teams with local practices
- What are the competency factors that the managers are driving? Are they aligned to what the HR is wanting? (Hint: does this explain the problem in hiring? Are JDs aligned to what the Managers are looking at?)
About us : Pexitics (People Excellence Indicator Analytics ) is an HR and Analytics firm based out of Bangalore ( Check Pexitics.com). Four primary focus areas are PexiScore Assessments, PexiScore Surveys, People Management Consulting and HR analytics.
We help organisations meet KPIs in the space of People management (increase Revenue per employee, Reduce Absenteeism, create Mental wellness programs , Create benchmarks for assessments used in hiring and promotions for better Talent management etc.) We do this with a combination of Assessments and Surveys followed by analytics, giving clear insights and roadmaps for organizations and teams. (Please view sample reports at https://pexiscore.com/assessment)
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