Much debate in social media circles has been given over to the merits or not of whether to include an employee appraisal system to enhance the way you measure and manage your company and employee performance.

On the face of it, CIPD (The Chartered Institute of Personnel and Development) and ACAS (The Advisory, Conciliation and Arbitration Service) advocate the benefits of the performance appraisal review and encourages carrying out appraisals as good practice in an organisation, as a tool within a performance management system. Not only is the employee appraisal system seen as a way to measure and give feedback on individual performance, but they also help to safeguard an organisation by operating a consistent means of assessing performance.

Coaching and development

Increasingly though after years of doubt and cynicism about the effectiveness of these systems, leading experts are taking the debate to the edge and challenging companies to think again. Josh Bersin of Deloitte Consulting LLP in his excellent article – Are Performance Appraisals doomed? – sets out in detail why companies should avoid the pitfalls of performance appraisals. Bersin suggests an alternative approach. His view is that focus should be on coaching and development and the whole process unlinked from other criteria such as reward or promotion.

In a similar vein, Coens and Jenkins in their book Abolishing Performance Appraisals! – Why They Backfire and What to Do Instead also come to the conclusion a coaching and development approach is more effective.

Taking the idea of giving feedback to employees even further, Eric Mosely of Globoforce, in his HBR article Crowdsource your Performance Reviews, sets out his vision for leveraging the collective intelligence of peer review as a means of giving performance feedback.

Some years ago Accenture set the business world alight when they announced they were ditching the annual performance review for regular one-to-one meetings.

Employee appraisal system or not

With so much conflicting advice and speculation, it’s difficult for you, the SME owner, to know how to move forward. Much of course depends on the size, maturity or culture of your business. Very small businesses where the owner oversees a small workforce start out with little need for a formalised system. Manager and employee discuss performance issues on a day to day basis. Once a business has grown, the owner usually hands over management of employees.

In my own experience, employee appraisal systems have had mixed levels of success. There are many components which determine effectiveness. These include factors such as employee mindset and personality; manager skill and flexibility; as well as the complexity of the performance management system itself.

Performance appraisal

I’ve seen many instances of failing employee appraisal systems where the expectation was that the performance appraisal meeting was a one size fits all for all elements of the performance management system, which clearly wouldn’t work.

The most successful performance review systems I have witnessed have been those where the manager has adopted a coaching, development and mentoring role. Celebrating and encouraging employees to take ownership and responsibility for their outcomes.

Instead of picking up on past details about what the employee has done, there is a different approach.   There is a focus on driving up performance, rather than reviewing performance, it takes away the ‘tick box’ mentality. This then creates a continuous improvement culture, which will by its very focus lead to better results.

Mosely’s vision of crowdsourcing employee feedback has a certain allure but would need a huge culture change.

Suggested components of a performance management system:

Whatever you decide, an appraisal or review system is only one single part of a wider performance management system. Typically a performance management system will:

  1. Measure how well your workforce is doing and be able to agree with each employee their contribution to achieving business objectives.
  2. Set clear standards of performance.
  3. Use outcome-based objectives to drive up the performance of individuals and teams.
  4. Have a transparent way of determining financial reward against performance if performance pay is part of the company reward strategy.
  5. Make sure people have the support and resources they need to get the job done.
  6. Have a fair system of identifying and dealing with under-performance.
  7. Create a culture of giving and receiving feedback whether in a formal appraisal/ review system or not.
  8. Encourage and act on emerging strategies, contributions, ideas and innovation from employees.
  9. Detect looming problems via an early warning system.
  10. Be able to swiftly react to change and development needs.
  11. Encourage continuous development of your employees.

Are you scrapping your performance appraisal system for a more informal review?  What works effectively for you?

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