Employee Performance rating has become the modern day blasphemy in the corporate world. Fortune 500 companies have either scrapped or moving away from annual appraisal system. Technology giants like IBM, Microsoft and Dell showed the way and the professional services firm like Deloitte, Accenture and PwC followed suit. The final straw is the traditional American corporation, General Electric, abandoned its legacy Performance Management System and forced ratings in favor of a sophisticated and effective, employee engagement and empowering system. It made every organization rethink and innovate their performance management system.

Why the Tectonic Shift?

According to CEB, More than 80% of organizations are making a major change to performance management – or already have

The traditional Performance Management system is neither working well for employees nor for the organizations. Employees, managers and organization are unsatisfactory either with the process or/and with the outcome. The human effort and money spent on annual appraisal process are hardly justifiable when it serves no real purpose and just become a dreadful annual ritual which everyone despises.

The traditional annual performance appraisal misses all important aspects such as employee engagement, employee development and utterly fails to motivate employees to achieve their full potential. It is high time we give a complete overhaul to performance management.

Does Past Metrics Guarantee Future Performance?

The annual employee evaluation system doesn’t address the predominant problem, how to improve the efficiency or the productivity of the employee in the on-going or future project/work? We can berate or praise them during the end of year evaluation and reward them or punish them with promotion or a pink slip. The question remains the same. How effective is my evaluation system to motivate and nurture employees’ skills?

The employee appraisal process is like “too little too late”. In this fast-paced age waiting to be recognized for one full year is too much to ask from an employee. When the moment is gone, the recognition may not be as sweet or as significant at the end of the year.

Unbalanced Ratings

The forced ranking made the matter worse. This method mandated the managers to classify the employees as a top performer, potential performer and non-performer and provided specific gradients. This forced fit method is really counterproductive. It doesn’t reveal the true picture of employee’s performance. Besides, the lenient ratings by the manager may demotivate high performers and rigid ratings result in large low-performers. Both are detrimental to organization growth.

The Pitfalls of Metric-Centric Method

A Trinet Survey reveals, “Performance reviews negatively impact productivity, morale and talent retention”

Traditional performance rating largely focusses on the employee’s ability to achieve the bottom-line. Their performance is quantified and given a numeric rating score. The intangible personality traits such as team spirit, leadership qualities, out of box thinking, helping colleagues in work, and so on cannot be quantifiable in the rating process. This leaves a huge gap in nurturing leaders in the industry. The Organization can’t grow just with efficient workers who play their part to perfection. It also needs talented leaders and innovators who may have failed in few of their initial ventures. Their boldness and new breakthrough ideas will propel your organization to pinnacle.

So… Do We Leave Performance Rating??

So, Shall we simply scrap the performance rating? If you don’t measure how can you manage? Don’t we need a computable figure for giving hikes and a grading or some other system for justifying promotions? In reality, it is not the end rating but actually the evaluation process that needs to be revamped and is the only point of discontentment among the employees. Employees don’t hate performance rating they just despise the process.

Here are the simple but effective tips to help you modernize your performance management process and be on good terms with your employees and achieve your organization’s objectives

Keep the Focus on People

It is this simple but often overlooked philosophy that renders the traditional performance management system highly ineffective. We are evaluating people and the focus should be on People. The huge success of Silicon Valley companies is attributed to people. Those companies invested in their people. They nurtured them, engaged them and empowered them and the outcomes are visible in their humongous growth.

While devising a new performance management model, keep your focus on evaluating people, their competencies, and their technical and interpersonal skills.

Coach the Cultural Change

Moving away from the traditional appraisal system can only be effective if the managers are educated and trained to handle the changes. Make your organization culturally ready for continuous performance management. Inculcate the rich culture of frequent feedbacks and constant communication between managers and employees. Make the constant communication process simple and part of the workflow.

Place a Well-Structured Evaluation Process

Set well-defined goals, its weightage and clearly communicate it to your employees. Set the terms of engagements and monitor their progress in real-time. Evaluate performance of your employees at a granular level. Foster continuous conversation, frequent feedbacks and check-ins. Include development training within the ambit of feedback discussion.

Embrace Agile Technology

Technology tools make the performance management transformation easy and hassle-free. The paradigm shift from annual appraisal to the continuous performance management makes frequent feedbacks, employee engagement and training an absolute must have for organizations. To monitor and manage these, organization turns to a robust, feature-rich, automated performance management solution.

Technology makes setting goals and monitoring progress, initiating and reminding continuous feedbacks and assigning and tracking skill development training very easy. Moreover, with technology the time to complete your appraisal process will be drastically reduced, say from 2 months to 2 weeks.

Incentivize Performance Throughout

Performance incentives must not be an annual ritual and it should not necessarily be in the form of monetary benefits. Recognize employees work and contribution right away. Awards and reward programs greatly improve employee satisfaction, no matter whether it increases compensation benefits or not. The periodic feedback and recognition boost employee morale and motivate them to thrive.

Do We Rate the Employees or Not?

No rating approach complicates finalizing promotions and pay-hikes. It’s always better to find a middle ground. Instead of giving a single rating evaluate and score them on multiple competencies. Remember there is no one solution fit all model available for performance management. Choose whatever model work for your organization and business objectives. Keep your rating model holistic and effective. Your performance management system must take into account past, present and future performance of your employees.

Your performance management system must nurture your employees, engage them, motivate them and most importantly help you retain them to achieve your business goals.

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