Down with appraisals!

Jack Welch said “There are only three measurements that tell you nearly everything you need to know about your organisation’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energised employees who believe in the mission and understand how to achieve it.” Wise words indeed.

Every business is different and no one size appraisal system fits all.  It’s imperative to understand corporate performance indicators before you embark on any change and it follows that in any role, in any business there is a link between the following:

1. A clear mission (so that every person at every level knows what they need to do to achieve it)
2. The work we do and how well we perform it
3. Evaluation from the customer, the boss or a peer.
4. Feedback (the information given to us which can help them improve our performance whichever level we work at) and
5. The profitability and success of the business.

The faster this feedback happens the better. These days it should be easy to collect it because of the data driven systems that we have in place. Speed is important because employee performance is inextricably linked to customer experience.  Customer loyalty has to be gained and regained monthly, weekly or even hourly in some cases.

So why, oh why, do organisations continue to cling to the old fashioned annual or even bi-annual appraisal systems?

It was relevant in the 1980’s – but not today.  If you are still plodding along with annual appraisals, wasting time discussing things that happened 12 months ago, do yourself a favour – consider how you will replace it.  How can you get real time performance data to your individual employees so that they can take accountability for their own performance?

Case Study

We’ve recently helped a London HQ to change their appraisal system to align with their corporate performance indicators.  One of the unique questions we asked them was – How do individuals in your workforce like to receive information on their performance? Reflector, activist?  Do they need visual evidence or audio?  Finding out what makes individuals tick and motivates them to improve was  to be a powerful tool in informing us of how to pull together the new system.

Given the raft of customer data available in that company the teams are now in a process of everyday performance review. Over time they have developed employees who, for example, on receiving some negative feedback now have sufficient growth mindset and confidence to share it with their manager and ask for advice on how to improve. When they receive great customer feedback it’s an opportunity for celebration.  Embedding that sort of confidence required trust and a shift in the culture.

There were other, wider, performance measures to consider as well and even these are now looked at continuously rather than annually.

• How to measure the impact of the combined team.
• How effective are meetings? Do they drive improvement and goals or do they look backward?
• How are the relationships within the team affecting the smooth running of the business?
• Which 2% of roles and performers in the business are making a real difference to customer experience, profit or success
• How to link the new way of working to reward, L&D and progression

The new system has been a success.  The business has grown and now has offices in Singapore, America and South Africa.  The business has been sensible enough to review the Appraisal system to ensure it suits the culture of thosse different bases.

Lessons Learned

1.  Despite moving away from annual appraisal, a leader still has to monitor and manage performance,  so why not put a “real time” rather than ‘historical reporting’ emphasis on the performance of each individual.  Make it his or her responsibility to improve and the Leaders responsibility to coach and develop.
2. Encourage Leaders to check that their team is functioning well on a regular basis.  Identify a quick litmus test that links to your corporate performance indicators and business DNA. This will be a much more effective way of spending Leaders time than that blessed appraisal round.
3. Finally, remember that no one individual is the same and so your performance management system should reflect that fact. Your business is bursting with individuality, authenticity and difference.  Unleash it and it could be the most powerful competitive advantage you have.

Ruth Gawthorpe is the owner of The Change Directors and knows just what it takes to refresh your Appraisal System so that it wins the hearts and minds of your people and helps you business grow. Call her on 07976 509 551.