Don’t like the Annual Appraisal? Make it Redundant - Guest Article by Ian Thompson

Most HR people don’t like the traditional annual appraisal process.  However, there is less agreement on how to replace it.  I’ve researched and piloted alternatives, but I’m still trying to identify a better framework.  I’d welcome feedback.

I like the concept of replacing “managing performance” with “continuous coaching”.   Frequent line-manager discussions fusing a basic coaching model, should give a continuous cycle of goal setting, reality checks, discussion of options, motivation and progress.

Would this approach overcome the flaws in the annual appraisal process?

• Will people get the direction and feedback they need?  They would probably get more useful feedback, however a ‘no rating’ approach makes it easier for a weaker or timid manager to dodge having to say, “your overall performance is below expectations” and to give vague and weak feedback.
• Are employees treated fairly?  Appraisal schemes use peer and/or manager review and calibration to aid consistency. Sometimes it works, sometimes not.  The same issues would apply in a coaching-based approach, so some form of calibration needs to be included into a talent and potential discussion.  This requires a structured approach to talent development.
• Appraisals are often the ongoing record of performance.  HR can over-complicate the process and performance reviews can become an administrative chore. In practice, records are often of limited value.  Management appraisal summaries are either too imprecise to aid management future decision-making, especially on underperformance, or time-consuming to produce.  The answer probably lies in text-based data analytics and not in the performance management process itself.
• Do our managers have the skills, motivation and time to make ‘continuous coaching’ work? This is the critical issue. Annual appraisals force all managers to do something at least a couple of times a year – and ‘something’ is better than nothing. Better managers do this more effectively and frequently.  With these leaders the limited and clunky formal appraisal system is redundant, they just don’t need it.  A coaching approach probably makes better managers more effective, but doesn’t eliminate the challenge of managers who are unable or unwilling to learn to manage people well.

I think there is a better tool than the traditional appraisal process and it will be company-specific.  This is the easy bit, although this transition is hard enough.  The HR challenge is to develop a culture that makes the process redundant in an environment that continually nudges managers to want to coach their team members and to tackle tricky issues.

Most managers will never be charismatic, eloquent, confident and courageous.  If they miss business targets then you won’t have a business.  Major tasks matter – whether it is a product, brand, engineering, sales, etc.  A business can muddle through, at least for a while, with mediocre leaders.  A significant improvement in the quality of people management requires a significant investment of time and resources.  The challenge for HR is to demonstrate the long-term value that good leadership brings.  If the case is not yet supported by senior management, then there is still plenty to do.  Keep working on the case for change and, in the meantime, simplify, join up and improve the various policies and activities that impact performance management.

Good and consistent performance management is exceedingly hard to achieve, but I don’t think it is a pot of gold at the rainbow’s end that can never be reached.  It is worth the effort.

“Ian Thompson is a Yorkshire-based senior HR professional and CIPD Fellow.  His varied HR career started at Durham University and has included HR leadership roles in estate agency, financial services and technology.  He has also worked as an interim manager on a diverse range of change and HR assignments.  As International HR Director at TSYS, he led the HR team through a five-year business transformation of a large multinational FinTech business.  He is committed to progressive HR and insatiably curious about workplaces and leadership.”