Most managers and their staff have long viewed the annual ritual of performance appraisals as time consuming, excessively subjective, demotivating, and unhelpful to driving performance. Employees often struggle with their ratings, stress about compensation, and try to make sense of the subjective performance feedback.
Leading organizations like GE, Deloitte, Accenture, Adobe, Microsoft, and many more have all abandoned their annual employee evaluations in-spite of the practice being deeply ingrained in their HR process.
Though this is still a new area, there are some emerging patterns on what works:
- Focus managerial and HR time on employees whose performance is further away from the average. For example, identifying and nurturing truly distinctive people is a key priority given their disproportionate impact to the organization
- Increased value of objectivity and HR system data, preferably real-time.
- Delinking evaluation data and compensation. i.e. research suggests that employees worry excessively about the pay implications of even small differences in ratings. Although counterintuitive, linking performance with pay can demotivate employees even if the link produces only small net variances in compensation
- Better recognition that the things which really motivate people to perform well are feelings like autonomy, mastery, and a sense of purpose
- Innovative companies are exploring how to provide better coaching — at scale. Experts lean on changing the language of feedback, to provide quick, crowd-sourced feedback of what worked and what didn’t, and to focus performance discussions more on what’s needed for the future than what happened in the past
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