The trend to move away from annual reviews is gathering pace, with more and more global organisations like Deloitte already ditching this process. However, this leaves a void in employee, manager and organisational communication and reporting. What can replace the annual review and deliver a more effective methodology of measuring performance?
What should I be measuring now?
Annual reviews don’t work because they take too much management time, require considerable form filling effort and, in many organisations, seem to have become divorced from reward and development. Furthermore, whilst annual reviews ( at best) provide a forum for retrospective discussions of the previous year enabling some feedback sharing between managers and employees, whatever information was gained gets lost at an organisational level and remains untranslated into organisational improvement. The retrospective nature of annual reviews also means that reporting at an organisational level is on a static, historical basis rather than in real-time. If goals, objectives and KPI’s are not being met, often there is considerable time lag before this is reported and any identified issues are addressed.
The problems with annual reviews can be grouped into three core issues:
1. Manager time-heavy exercise
2. Information generated is not developing the organisations capability
3. Reporting is static and retrospective
Shifting from performance reviews to continuous dialogue
Perhaps the time has come to think of performance management as something different, as a continuous dialogue across the organisation. For this to work effectively, a process is required where KPIs, goals and objectives for each individual are broken down into milestones and subject to regular reviews between employees and managers.
Using the right performance management and engagement system, this process can be activated easily to provide real-time capture of how people are tracking against their milestones. The ability to generate real-time reports will enhance the ability to predict performance and deliver greater organisational visibility. It also reduces the risk of non delivery.
What is more, there is a further evolution in performance management where real-time performance data can be linked to employee engagement and development data. It is important to consider that engagement and performance are two sides of the same coin. On one side is output and delivery whilst the other reflects sentiment and motivation. It is hard to have one without the other.
In our recent work with The Saracens Rugby club, the most successful English Rugby team of the last decade, the emphasis on linking performance outputs with player engagement, motivation and development is central to their winning culture. They also have established continuous feedback and dialogues to support ongoing performance improvement.
In the commercial world, it is slightly different to the weekend game, weekday review followed by another weekend game format, but lessons can be taken from sport on how structured, regular check-ins around performance goals combined with regular engagement reviews can replace the annual review. The results when activated correctly can be better organisational visibility, reduced performance risk and less manager form filling!