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Should End-of-Year Performance Appraisals Be Dumped For Good?

27/04/2016 8:31 AM IST | Updated 15/07/2016 8:26 AM IST
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Man being interrogated.

A shift in the way we think about performance evaluations has been taking place in the world of human resources. It's pretty exciting stuff. Some go as far as to argue that the performance appraisal system itself is an exercise in futility and a waste of time; companies such as Accenture and GE have jumped on board and dumped their annual performance reviews. This position (often backed by employee research) calls for an approach that transcends merely doing paperwork and "checking the box" and says that employees need regular feedback as opposed to end of year appraisals etc. I am entirely in agreement with these observations, but I want to dig a little deeper here.

The fact that managers avoid their responsibility of providing regular and candid feedback can hardly be used as an argument against the system.

What I don't see is the basic question that research should ideally lead to--the reasons for why the appraisal process is as big a failure as it appears to be. I would argue that the reason for this failure is not the process but the way managers are equipped to run the process. Let's face it, as human beings most of us find it difficult to have a clear, non-confrontational, objective feedback conversation with people we spend 40% of our lives with. Particularly in high-context cultures like India, managers struggle to communicate anything but positive messages to their employees. Appraisals fail because managers avoid direct feedback, and as a result the employee finds a clear gap between what has been communicated to him and what actually lands up on his table as the performance score.

Everyday performance events must be noted--but it's as important to allow for these performance events to be plugged into a broader and more comprehensive [review].

The other argument that feedback should be frequent and event-based as opposed to happening at the end of the year also reveals a fundamental flaw in how managers work. Managers are always expected to provide feedback along the way, so why aren't they doing it? I haven't come across a single performance management system that prescribes annual appraisals as the only method for giving feedback. The fact that managers avoid their responsibility of providing regular and candid feedback can hardly be used as an argument against the system.

The alternatives that organizations are offering to replace the performance appraisal system is to provide "check ins" and "continuous feedback" conversations between managers and employees. While I think these are valuable components of the process, the real solution lies in equipping managers to have continuous coaching conversations with their people while also providing an opportunity for the employee and manager to sit together at the end of the year away from the heat of the moment and reflect on how the year has been--something that the annual appraisal process originally wanted to drive.

Let's not forget most HR systems don't fail because of the process, they fail because of the people.

Stock markets are considered imperfect because they are volatile-- every good or bad news about a company results in the price moving--and the expectation is that shareholders should take a long-term view of the company and look at the performance based on annual results/dividends etc. I think there is a parallel to this in employee performance. Yes, everyday performance events must be noted and discussed--but it's as important to allow for all of these performance events to be plugged into a broader and more comprehensive conversation at the end of a period of time. And finally, instead of focusing on the flaws in the system, let's focus on how we can make managers more equipped to have objective, development-oriented conversations with people. Let's not forget most HR systems don't fail because of the process, they fail because of the people.

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