Adrian Lewis is the Commercial Director for Activ People HR
Performance appraisals receive conflicting press. The need for them or otherwise is proving hard to settle in the HR world.
One minute we are being told that performance appraisals are dead, with the CIPD reporting in 2015 that 2/3 of businesses want to restructure the process and 1 in 20 businesses are planning to scrap performance appraisals altogether.
Skip forward 12 months and the CIPD are reporting on a CEB study that found employers who scrapped appraisals have seen ‘significant’ drops in productivity – so where does HR go next?
In my experience, many SME’s have never used appraisals anyway, but lots of them are saying they need to and they are looking for appraisals software to help manage the task.
As our blue chip customers speak to us about improving existing processes, most of the SME's I speak to have no formal structure in place for staff appraisals and it's high on their list of priorities. The new research and the UK’s productivity gap brings appraisals back to the table – but for many, introducing performance appraisals was ON the table anyway - and our new website, www.activappraisals.co.uk, is already receiving praise!
The Way we Were
The old, outdated model is definitely NOT the way to implement performance appraisals. With annual reviews linked to pay and the opinion of just one manager, both staff and managers simply found the process stressful and unhelpful.
In older structures, standards would vary widely from one appraiser to another and whilst the review should relate to a whole year, in practice it only related to the last few weeks and was purely based on the reviewer’s current opinion on the reviewee’s performance – records were either non existent or messy, goals were arbitrary and the endless exchange of Word documents created a challenge - and we wonder why it didn’t work well!
I’m not surprised some larger businesses scrapped the process – but the drop in productivity shows that scrapping them is not working either, so rather than throw the baby out with the bathwater, the UK needs to tackle its productivity issues and start to engage their people in a constructive way. Those who have improved the performance review process are already seeing results.
Adobe succeeds with Process Reform
Software giants Adobe have replaced annual performance appraisals with a system of ongoing feedback - results are very encouraging.
An employee or a manager can request a “check-in” meeting every three months.
Before the meeting, the manager requests feedback from the employee, and also obtains feedback from their peers across different levels, including co-workers and other managers. The results give the manager a wider perspective on staff performance. The manager can then tailor their advice accordingly. The approach is collaborative, continuous and engages both sides. Group performance is also evaluated, leading to a more rational determination of group compensation.
The results speak for themselves: Since changing the process, Adobe have experienced a 30 percent reduction in voluntary staff turnover – which is rare in a highly competitive talent environment.
Automation can make it easier
Our Bridgend-based team recently celebrated the launch of a new version of our Activ Appraisals software, which helps businesses conduct more effective performance reviews. The same steps could be followed manually, but the automation makes it less time consuming and avoids a flurry back and forth of Word documents and emails.
Firstly, HR are able to set up a competency framework, so that line managers have a consistent standard throughout the business against which to assess employees.
Managers can choose the frequency of the review meetings, but employees are involved in the process, rather than just called to attend a review meeting.
Managers can still elect to do traditional annual appraisals if they prefer, however there are conscious changes which improve consistency within the process and more importantly, engage employees better. For dynamic employers keen to move towards a more frequent ‘Adobe style’ process, the system works brilliantly.
Managers can choose the frequency of the review meetings, but employees are involved in the process, rather than just called to attend a review meeting. Employee feedback is requested automatically ahead of the meeting, which the manager will have chance to review in advance. The system also allows managers to implement peer reviews, commonly called 360 degree reviews, though not everyone uses this feature.
Setting Smart Objectives
In order for performance objectives to work, it is universally agreed that they need to be SMART:
· (S) Specific
· (M) Measurable
· (A) Achieveable
· (R) Realistic and
· (T) Time framed
The Activ Appraisals system helps managers create objective statements in a SMART format.
Post meeting, managers can review or modify objectives at any time and employees are automatically notified. The system also allows employees to add their own SMART objectives and request training at any time, automatically notifying the manager.
Businesses using the Activ Appraisals software have praised its ability to improve the success of performance reviews. The ability to tailor the software to suit business processes is often praised by customers like Kleinwort Benson, although success is largely down to the improvements that the software makes to the process itself.
Encouraging an Individual Approach within a consistent Framework
Whilst software can help, the secret to helping line managers ‘get reviews right’ is to consider employees as individuals, encouraging dialogue and acknowledging and rewarding individuals whilst maintaining consistency in approach.
Focusing on an individual and taking their input consultatively recognises their worth and promotes a flexible approach and individual coaching – which usually produces better results.
Far from being dead, regular performance appraisals can be empowering and can leave an employee feeling more motivated and a vital part of the team. In a climate where competition for talent is hotting up, and the productivity gap is a constant challenge, I'd argue that not embracing some form of performance review leaves SME's missing a trick.
For the many SME’s who are struggling without them, I'm told implementing performance reviews is very much on the table.