The Annual Appraisal Process Is Dead

Earlier this year, my company complied the findings from their latest research report:

"The Future of Performance Management: What HR and Business Leaders Really Think"

The report surveyed 1000+ HR Business Leaders of small and medium businesses from a wide range of sectors and even included some industry experts and employees. Lots of interesting stats and conclusions came out of the report, but the one that stuck out to me the most was:

The Annual Appraisal Process Is Dead!

In my current role, I get the opportunity to speak to lots of HR leaders who are looking to invest in a new HR system, either to be their company's first-ever system or to upgrade from systems they’ve outgrown. When we reach the topic of performance management, the first thing nearly everyone asks for is the system to be able to support and enhance their annual appraisal process. If a company has any set performance process already in place, it’s always the annual appraisal. So how can it be dying, and what will the future hold?

From what I have experienced myself and heard from others, the annual appraisal is no longer seen as an effective way of managing performance. The static, point-in-time review is often not reflective of someone's full year and can be quite a stressful experience to try to remember everything that’s been contributed for the past 12 months.

The future is bright!

Findings in the report suggested the future will shift away from the annual appraisal and instead towards a more continual discussion around performance, with more objective, fairer goals being tracked and amended throughout the year, and the end-of-year discussion being replaced with a continual conversation throughout the year too.

Personally, I find this really exciting. Performance management will be less of a once-a-year tick-box exercise and become a much more useful tool to help us all feel more connected and engaged in our work. It makes me think of one company I’ve worked with, where their goals were tracked so well that they were able to offer employees complete flexibility over when and where they worked, including the rarely offered ‘unlimited leave’, all on the back of being able to say ‘as long as you meet these outcomes, we trust you to work when and how you want’. What an empowering position to be in!

If you’re an HR professional or business leader reading this, and that future sounds like a far-away dream, I want to reassure you that you are not alone. Also worth sharing from the report are these stats on what the reality of performance management is today.

A majority of companies aren’t there yet, that’s why it’s the future vision. Luckily, with lots of great HR and performance software on the market, there are tools that will make this transition really straightforward, and the engaging, empowering future we hope for can become a reality.

As always, I would love to hear from others on what they think the future of performance management looks like, plus the pros and cons of any of the options I’ve discussed above!

#hr #peopleandculture #worklifeblance #performancemanagement #futureofperformance