Work is speeding up: most business owners are navigating through a fluid and ever-changing world adapting to evolving business needs.
To be successful and able to pivot in times of change, a more agile alternative to the traditional once-a-year annual appraisal is needed. How can you introduce more immediacy and make sure there’s a strong alignment between your company, its managers and its employees? How do you create a more continuous performance management process in your company?
It depends on your priorities as business leader.
1. Improvement? –i.e. helping both the employee and organisation to get better results.
Defining and tracking objectives and their outcomes is one of the best things you can do to make sure employees and the organisation achieve better results. Most importantly, it connects the work of employees into the company’s strategic plan.
Set up a process to roll this out from the top down. It fits better with the pace of business life for progress with objectives to be reviewed and reset quarterly instead of annually at review time.
2. Coaching & Guidance? - i.e. a framework for coaching, counselling, and motivating employees.
Frequent 1:1 conversations between managers and employees are much better than having coaching discussions once a year during an annual review. You can empower your employees to prepare for their 1:1s and do most of the talking, so they're more effective.
3. Feedback & Communication? - i.e. enhancing both upward and downward communication
Employees now expect real-time feedback to help them achieve their objectives and to improve their performance. Relying on an annual conversation for feedback doesn’t work in this fast moving world.
A better alternative is to make feedback readily available by the company culture you create, where giving and asking for feedback is normal and expected.
You can enable social networking or online feedback tools that both employees and managers can use.
Employee recognition programmes based on values can be created to help employees get the positive feedback they need in order to keep doing great work. For example, you could give special awards to a few people every year for extraordinary technical accomplishment.
4. Pay? - i.e. tying individual performance into salary increases & bonus calculations.
Ratings at the annual performance review were often used to decide on salary increases and bonus allocations. Unfortunately performance reviews tied to compensation discourage straight talking and asking for help, undermine collegiality, create a blame-oriented culture, work against co-operative problem solving and easily become politicised. They’re self-defeating and demoralizing for all concerned.
So, many companies have moved away from this direct linkage. You can make salary adjustments based on market rates, new responsibilities and team/company performance, with perhaps a broad element for individual performance at the extremes.
5. Development Planning? - i.e. training & development for high and low performers.
Traditional performance reviews were often used to identify high and low performers and then plan their development in the future. While this process is important, doing it once a year is not frequent enough as it’s already too late to correct or reinforce.
Instead, use the information from 1:1 discussions and progress with objectives to identify high performing employees or the employees who need further coaching or training.
6. Preparing the way for dismissal? - i.e. documenting poor performance extremes in case of later dismissal.
Occasionally annual performance reviews were misused as a way of creating a paper trail of negative feedback on poor performers in case the company later needed to dismiss and defend itself against an unfair dismissal claim. Unfortunately once this has happened within an organisation, it’s very hard to convince any employees in future that an appraisal discussion is for their benefit!
The sensible way to deal with poor performance is to follow a disciplinary process that deals with these situations separately, and properly documents everything based on the ACAS Code of Practice on Discipline.
The Human Resource supports you with the changes you need to make in order to manage performance continually throughout the year, so that you make the very best of the people you have. We help you to be prepared, in control and confident that you’re doing the right thing.
Email The Human Resource on firstname.lastname@example.org or call on 07884 475303 to arrange a no-obligation chat.