An estimated one-third of US companies have abandoned traditional performance appraisals. Rather than an annual review to discuss the past year, companies are leaning towards frequent, shorter check-ins that emphasize development and learning. We don't want to eliminate the practice but reimagine it, shifting the focus from punitive to developmental.
While traditional reviews are time-consuming, focused on past behaviour, and offer delayed feedback, the new performance management model happens in real-time with open communication and an emphasis on continuous improvement.
Why are Performance Appraisals Changing?
1. Increased focus on employee development.
In our tight labour market, companies are looking to develop and groom their best employees to retain top talent. Annual end-of-year reviews focusing on reward & punishment hold people accountable for past behaviour, rather than looking to the future. New performance models shift the emphasis from punitive to coaching and development. Employees are encouraged to play an active role in defining goals, pinpointing growth opportunities, and highlighting successes.
2. Rapidly changing business environments.
Setting short-term goals with frequent check-ins allows for greater agility within the workplace. If there is one thing COVID-19 taught us, it’s that we must be adaptable. In a rapidly changing workspace, setting goals and having them relevant 12 months later is challenging. Setting micro goals and breaking down large projects into smaller steps allows for quick shifts if needed. With frequent check-ins, managers can provide feedback to remedy errors or change direction while projects are in the early stages.
How to Shift to The New Performance Appraisal
Rather than waiting until year-end to look back, the new performance reviews are informal checks that happen more frequently. This open communication allows for immediate feedback while projects and challenges are still fresh in everyone’s minds. Real-time feedback drives learning and growth as employees can quickly close gaps and maximize strengths.
Words like satisfactory or unsatisfactory are replaced by terms such as progressing and developing, focusing on growth and learning. Verbiage should emphasize supporting and coaching individuals to meet personal and organizational goals.
Focus on Development
Performance reviews are becoming less punitive and more developmental. Companies are having more human-centred conversations, looking at the whole person. Feedback is being used as a tool to empower employees, to coach and help them develop their strengths.
Provide 360-Degree Feedback
360-degree feedback gathers insights from everyone in the workplace for a more cohesive look at contributions and development. The one-way street of feedback is quickly becoming outdated, as many businesses opt for open lines of communication. It's no longer about the organization talking at the employee; it's a two-way street, with every individual allowed to contribute.
Encourage Active Contributions
Every team member should be encouraged to participate in setting goals, recognizing strengths, and pinpointing opportunities. Employees who are actively involved in creating their Individual Development Plans are more likely to be engaged, productive, and accountable when working towards their goals.
While we can't (and shouldn’t) wholly put an end to the performance review, we can modernize it to better fit today's workplace. Informal progress snapshots focused on employee development can save time, drive progress, and increase accountability.