Measuring performance in appraisals

Netflix and Accenture have reappraised performance appraisals; have you?

The annual performance appraisal has long been a frustration for managers, employees, HR and, well, just about everyone involved with them. That’s why companies like Accenture, Gap, Netflix and others are trying different, and in some cases hugely innovative, approaches.

Traditional appraisals are often derided as a tick-box exercise and dreaded as an inefficient, unfair and unreliable approach to appraising performance, so something had to change. And it appears that, for most organisations at least (65%), it has. So, what is it being replaced by?

Our snapshot poll of HR professionals representing medium-to-large private sector companies at our recent roundtable events showed that:

  • 52% run half-yearly performance reviews
  • 13% run quarterly reviews and check-ins.

Of the others, a quite considerable proportion (28%) still have a single annual performance review.

Better enabling high performance

There’s not a right way to do appraisals or a particular frequency that’s best for all organisations. You need to find a process (and system) that works best for your business.

It should be quick and simple to save on administration time for those involved. And it needn’t be over-complicated. At its most simple, your performance management process needs to:

  • Enable tracking and measurement of performance against agreed objectives
  • Create transparency around appraisals
  • Make it easy to link individual performance with wider business goals
  • Free up managers and their direct reports to have high-quality performance and development-focused conversations.

Doing all of the above well will go a long way to building a high-performance culture. As will having the right performance management technology – but this should facilitate rather than replace performance conversations.

What are top-performing companies doing?

Accenture

– the leading business consulting firm recently moved away from an annual appraisal. In its place, they’re introducing a much more flexible approach which involves managers providing on-going feedback in real time during projects and assignments.

This approach fits with employees’ demand for more regular check-ins on performance to aid their development and progression.

Gap

–this global retail giant provides another refreshing example of how to manage employee performance.They responded to employees’ fears around the traditional annual performance review and have replaced it with an altogether less formal, more conversational approach between manager and direct report.

Called ‘Grow, Perform, Succeed’ this involves managers having monthly discussions with their employees, usually outside of the office environment. And, most importantly, it is treated as a conversation rather than a forced, ranked evaluation.

Netflix

– this online media firm takes a radical, ‘no holds barred’ approach to performance management and it’s one that may not work for all businesses. People are encouraged to have performance conversations as a business-as-usual activity. Additionally, everyone in the company undergoes a 360-degree performance review where they’re able to provide feedback to anyone else. As a minimum requirement, they’re encouraged to do so for all of their peers and manager in their team. The belief at Netflix is that people can handle anything as long as they’re told the truth.

What else should you be doing?

If you only make one change to your performance process, make sure it is to align individual performance with your culture and strategy. It might seem like common sense, but this kind of alignment isn’t always the norm in businesses.

From a strategic perspective, your senior leaders’ objectives should be cascaded down through the business. Setting clear and measurable objectives in this way will ensure clarity and alignment of goals. This, in turn, means your employees will be aware of and ‘on board’ with your goals as a business.

From a cultural perspective, you need to make sure your employees are working in the right way, that they embody your cultural values and display desired behaviours. It’s important to gauge how they’re working as well as what they achieve. 360-degree feedback is a great tool for measuring this and can be a great catalyst for them embedding cultural values and desired ways of working.

Doing this well will certainly improve your performance management process and should also lay the foundations for delivering sustainable high performance.

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Related resources

How should you replace performance appraisals? Case studies & checklists

Here we explore case study examples from Adobe and Facebook and look at the latest best practice on running performance reviews that work.

Drive high performance with balanced scorecards like Apple & Microsoft use

In this this blog we explore how using balanced scorecards helps companies such as Apple and Microsoft to drive high-performance among employees.

Replacing performance ratings… How Amazon, Deloitte and Google do it

Performance ratings and performance appraisals remain a source of frustration. To provide some inspiration, we look here at case studies from six big companies who’ve moved away from ratings.

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