The Evolving Future of Performance Reviews

• Creating a culture of growth and making managers responsible for the development of their team members.
• Delink performance management from career development and compensation decisions.
• Simplify the performance management process and related documentation requirements.
• Include a 360-degree feedback system which offers more objective performance appraisal.
• Make managers accountable for coaching, feedback and development of employees.
• Allow employees the freedom to opt for specific objectives, goals, and suitable compensation.
• Limit performance reviews to a team or project instead of individuals.
• Provide a sense of belonging to employees, through consistent efforts.
• Compensate star performers well to ensure their commitment and loyalty.

The world is veering towards an agile, conversation-based performance appraisal process. This a far cry from the earlier rating-based performance appraisal process. The current review process is more agile. It helps to reorient employees for better performance and results. It is about coaching, appreciation and creating a culture of learning and development. The new approach requires more conversations, and more willingness to contribute and to improve, when necessary. People need to focus more on the output delivery and not on being at their desk and seen to be at work for a specific number of hours, by everyone and especially their boss.

Performance appraisals seem unwarranted in terms of time, efforts, investments, and validity of outcomes. Many companies still have a formal performance management practice that includes yearly reviews. The results of these reviews are linked to compensation or other talent management decisions. However, the real performance appraisals today are not about the performance ratings. It is to ensure that the employees are successful. It is to help them meet their goals. It is also about flexibility in work where people can accomplish their tasks in a remote, delivery-oriented manner, enjoying ample work-life balance to achieve what they need to.

Many companies are replacing the traditional processes with ongoing feedback and coaching as an agile, dynamic and engaging alternative. With this whole new approach to performance management, here’s how you can ensure that your employees are being productive and meeting their goals.

• Creating a culture of growth would take care of the performance aspects of a workplace. This is done without hurting anyone for not knowing something. With the pace at which knowledge is growing across a variety of aspects, this approach serves workplaces focused on performance delivery. Link a manager’s success to not just by getting work done, but their ability to engage their teams and help them to succeed.
• De-link career development, compensation and other talent management decisions from the performance management process. Most companies are now calling it performance development or coaching, taking the review process out.
• Simplify the performance management system and make improvement in performance the main and only focus of the process. Set flexible goals which allow format and timing to be tailored to the work and align them to organizational goals. Set agile team goals to ensure that overall organization goals can be met. Emphasize performance measurement and eliminate unnecessary documentation.
• 360-degree feedback systems offer better performance appraisal and feedback than the subjective feedback offered by a single manager. The feedback could be sourced from one’s colleagues, supervisors and even internal customers in real-time, making it much more accurate and effective compared to an annual feedback exercise.
• Get your managers trained on having quality conversations which focus on coaching and feedback, with informal, ongoing appraisals happening continuously to help employees deliver better and improve. Managers need to be made accountable for having these interactions and ensuring the outcomes.
• In a remote work environment, everyone is free to adopt objectives and goals which they are capable of achieving. In a remote, work-from-home scenario, they can do this after factoring in and accommodating their family’s needs into their schedules. Their objectives and compensation can be modified based on their ability to accommodate duties. Employers can leave them free to meet or exceed the goals set for them.
• Performance today is also managed by driving collaboration between individuals, their teams, and their manager. Many are seeing better results by moving to performance appraisals at the level of a team or project and shelving the individual approach.
• To derive a consistently high quality of performance, organizations today are putting in extraordinary efforts to inspire employees to identify with their organizational goals and offering them a sense of belonging rather than a professional relationship which is based on an employment contract.
• Employers today compensate their star performers way above the industry average to keep them committed and loyal to them alone. Companies want to set fluid objectives which morph in response to the strategic direction set for the company and have their employees willingly change course and learn new skills as needed.

Annual performance appraisals are fast losing traction in the corporate world. Almost no one gets them right. Moreover, they waste everyone’s time and end up demotivating employees and increasing attrition. They hardly help to improve the performance of people too.

Do people need them because they help with the compensation decisions? Or is it a fear of the unknown and preference for the known devil?

But a little reflection would be enough to realize that the outdated, industrial era performance systems with their contrived bell curves hardly have anything common with today’s complex, remote, work-from-home delivery and performance. What’s more, replacing negative performance appraisals makes sense for another reason too. The willingness to develop and support one’s employees would surely ensure that companies enjoy superior levels of performance from many more employees than ever.