The recent announcement by Accenture that it intends to abandon its traditional annual performance review and change ‘90% of what we did in the past’ follows the previous examples set by Microsoft and Deloitte.
Performance reviews are no longer considered effective by many businesses. A CEB survey revealed that 95% of managers are unhappy with their way their companies carry them out and 90% of HR leaders claim the process doesn’t produce relevant information.
What does this mean for businesses and for HR?
With levels of engagement in the UK workforce running at an unprecedented low, striking a balance between providing effective ongoing employee feedback while meeting company needs is unavoidable. In an employment market where HR technology continually hones the hiring process and the way in which employers attract, hire and retain qualified candidates, performance reviews have remained relatively unchanged.
HR thought leaders now advocate a more fluid, ongoing process rather than a one off annual event and another check box for HR to complete. Accenture will continue assessing its staff, albeit in a radically different way, carrying out one-to-one reviews after the completion of individual projects or assignments.
For employers yet to consider an alternative, HR must find a way to deliver a review structure which reflects the concerns and lives of its people while simultaneously achieving company performance objectives.
What will fill the gap?
The vacuum left in their wake must be replaced by a sustainable and workable formula which takes management and legal issues into account. Feedback must be well prepared and comprehensive in order to:-
- Manage the performance of employees.
- Reduce the employer’s exposure to legal risks which, in the worst case scenario, may result in claims of constructive or unlawful dismissal.
Creating meaningful performance reviews
If HR’s goal is to move to a more ‘continuous’ appraisal system, employees should be clear on what is required of them to meet their objectives. In an ideal culture, feedback should leave employees feeling motivated to succeed and achieve but in reality this is not the case. More frequent reviews must be meaningful to avoid replacing one ineffective system with another.
According to a recent article in the Harvard Business Review, 30% of feedback may actually cause more harm than good. The article offers the following tips to ensure a positive experience:-
- Increase self awareness of employees.
- Offer ‘negative’ feedback.
- Make the feedback session personal to the employee, not the manager or the company.
- The feedback session should mark the beginning of coaching, rather than the end of a session.
- Defining ‘where to next’ in order to succeed.
For companies considering a change to their people management strategies, the shift in performance reviews must be considered and timely:-
Our recommendations are:-
- Carry out more frequent reviews, for example, at the end of each assignment or major project as per Accenture’s lead, or at the very least, at the end of every quarter.
- Reduce the amount of time required to complete the review. Deloitte’s four questions include two which only require a ‘yes’ or ‘no’ answer.
- Set expectations. Employees who do not understand the full responsibilities of their role will fail to deliver what is expected of them.
- Listen. As the recommendations above suggest, this is about the individual employee, not HR or company managers.
- Offer encouragement.
- Refer to previous feedback sessions to evaluate progress but focus on the future, rather than the past. The increased frequency of performance reviews will assist in enabling employees to look forward rather than focus too heavily on past achievements or failures.
- Identify ongoing career development opportunities.
- Always schedule the next meeting when concluding the current one.
- Take advantage of HR technology. A key component of effective feedback is valid data. It doesn’t need to be complicated. HR technology automates key parts of the feedback process, stores data in a single place and enhances collaboration between managers and employees. The introduction of real time feedback offered by HR technology also offers a distinct advantage when carrying out an effective review.
It’s all about the hiring process
Accenture’s CEO Pierre Nanterme believes that the most important element in leadership is not about spending time ‘measuring and evaluating’ but ‘selecting the right person’ and giving them the freedom to innovate and lead in their role.
That starts with your hiring process. Create a talent acquisition strategy that works for your brand and helps you to achieve your business goals.
All elements of the hiring process are evolving. The performance review may be one of the final points of resistance.
Abandoning the performance review, a final thought
Is this the time to revisit splitting HR, as suggested in Ram Charan’s provocative article for the Harvard Business Review last year? In it, he advocates the idea of splitting HR into two distinct divisions, namely, HR-A (administrative) to manage administrative responsibilities including compensation and benefits and HR-LO (leadership and organisation) to assume responsibility for improving the capabilities of employees. One counter argument is the recommendation to infuse HR with with an operational mindset rather than wholesale disruption.
This hot and unrelenting topic is certain to be debated for some time to come.
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