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As the accumulating research on appraisal scores showed, they had as much to do with who the rater was people gave higher ratings to those who were like them as they did with performance. And managers hated doing reviews, as survey after survey made clear. In a study by the advisory service CEB, the average manager reported spending about hours—close to five weeks—doing appraisals each year. As dissatisfaction with the traditional process mounted, high-tech firms ushered in a new way of thinking about performance.

Although not directed at performance per se, these principles changed the definition of effectiveness on the job—and they were at odds with the usual practice of cascading goals from the top down and assessing people against them once a year.

The Performance Management Revolution

So it makes sense that the first significant departure from traditional reviews happened at Adobe, in Adobe explicitly brought this notion of constant assessment and feedback into performance management, with frequent check-ins replacing annual appraisals. Juniper Systems, Dell, and Microsoft were prominent followers. This trend seems to be extending beyond the United States as well. PwC reports that two-thirds of large companies in the UK, for example, are in the process of changing their systems.

In light of that history, we see three clear business imperatives that are leading companies to abandon performance appraisals:. Companies are under competitive pressure to upgrade their talent management efforts. This is especially true at consulting and other professional services firms, where knowledge work is the offering—and where inexperienced college grads are turned into skilled advisers through structured training. 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.

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. Kelly Services was the first big professional services firm to drop appraisals, in PwC tried it with a pilot group in and then discontinued annual reviews for all ,plus employees. Given the sheer size of these firms, and the fact that they offer management advice to thousands of organizations, their choices are having an enormous impact on other companies. Firms that scrap appraisals are also rethinking employee management much more broadly.

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. 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. And what am I doing that I should change? This has become especially clear at retail companies like Sears and Gap—perhaps the most surprising early innovators in appraisals.

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. All three reasons for dropping annual appraisals argue for a system that more closely follows the natural cycle of work.

Uncommon Sense: Moving from a Problem-Focused to Solution-Focused Mindset - Mel Gill - TEDxVarna

Ideally, conversations between managers and employees occur when projects finish, milestones are reached, challenges pop up, and so forth—allowing people to solve problems in current performance while also developing skills for the future. At most companies, managers take the lead in setting near-term goals, and employees drive career conversations throughout the year. Perhaps most important, companies are overhauling performance management because their businesses require the change. As GE found in and as research has documented since, it is extraordinarily difficult to have a serious, open discussion about problems while also dishing out consequences such as low merit pay.

The end-of-year review was also an excuse for delaying feedback until then, at which point both the supervisor and the employee were likely to have forgotten what had happened months earlier. Both of those constraints disappear when you take away the annual review.

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Moving to an informal system requires a culture that will keep the continuous feedback going. Deloitte, too, has found that its new model of frequent, informal check-ins has led to more meaningful discussions, deeper insights, and greater employee satisfaction. The firm started to go numberless like Adobe but then switched to assigning employees several numbers four times a year, to give them rolling feedback on different dimensions. 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.

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Experts in employment law had advised organizations to standardize practices, develop objective criteria to justify every employment decision, and document all relevant facts. Here are some of the challenges that organizations still grapple with when they replace the old performance model with new approaches:. In the traditional model, business objectives and strategies cascaded down the organization. All the units, and then all the individual employees, were supposed to establish their goals to reflect and reinforce the direction set at the top.

But this approach works only when business goals are easy to articulate and held constant over the course of a year. So as projects unfold and tasks change, how do you coordinate individual priorities with the goals for the whole enterprise, especially when the business objectives are short-term and must rapidly adapt to market shifts? Appraisals gave managers a clear-cut way of tying rewards to individual contributions.

Companies changing their systems are trying to figure out how their new practices will affect the pay-for-performance model, which none of them have explicitly abandoned. In pilot programs at Juniper Systems and Cargill, supervisors had no difficulty allocating merit-based pay without appraisal scores. In fact, both line managers and HR staff felt that paying closer attention to employee performance throughout the year was likely to make their merit-pay decisions more valid.

Even when they do, waiting until the end of the year to flag struggling employees allows failure to go on for too long without intervention. Juniper Systems also formally asks supervisors each quarter to confirm that their subordinates are performing up to company standards.

Adobe reports that its new system has reduced dismissals, because struggling employees are monitored and coached much more closely. Employee relations managers within HR often worry that discrimination charges will spike if their companies stop basing pay increases and promotions on numerical ratings, which seem objective. Leaders at Gap report that their new practices were driven partly by complaints and research showing that the appraisal process was often biased and ineffective.

Despite its complicatedness, the ability to work in team environments benefits organisations, managers and employees. Unlike the previous two, which I call interpersonal non-job roles, this is a personal non-job role and is about the employee continually growing and developing technically and personally. Having the desire to continually improve, upgrade, and expand their skill-base and develop personally benefits not only the employee, but their current and future employer.

Process Ownership and Governance; Paradigm Shift |

The final of the four non-job roles in the framework and the second of the personal non-job roles is the innovation and continuous improvement role. While the career development role is directed at improving the individual, the innovation and continuous improvement role is concerned with improving the organisation.

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This role is basically about offering constructive suggestions and changes in how the business functions, and covers a wide range of factors in the workplace. For instance, it may include improving the quality of products or service, reducing time and costs, increasing output and safety, meeting deadlines or enhancing interpersonal cooperation. The employee performs five roles at work. The current focus, however, is very much on the job role and it needs to shift to cover the non-job roles more comprehensively.

By doing so, we are broadening the scope of organisational performance. Great article and so true — there are organizations you describe in your first paragraph but they are disappearing because of the lack of these 4 simple capabilities. Subscribe to receive comments. The Telegraph Cryptic Crosswords 2. The Telegraph Cryptic Crosswords 3. The Telegraph Cryptic Crosswords 4.

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