Should performance snapshots replace annual appraisals?

Most organisations continue to use annual performance reviews, despite their flaws. Nick Gallimore explains why frequent ‘snapshots’ may provide a more accurate picture of employee performance and keep staff engaged with the process.

Annu­al assess­ments can be ​“wild­ly inac­cu­rate”, even ​“soul-crush­ing”, quoted a BBC article in 2019. For many, the term ​“per­for­mance man­age­ment” is associated with the dread­ed annu­al per­for­mance appraisal. Many cringe at the term, which isn’t surprising.

Annu­al per­for­mance reviews or appraisals have many flaws and yet so many companies use them – a 2018 sur­vey by World at Work found that 80% of com­pa­nies still used for­mal per­for­mance reviews.

They exist because many companies need the out­comes of the per­for­mance review process, although they’d pre­fer to get these out­comes by a bet­ter method.

Tra­di­tion­al per­for­mance reviews had four major weaknesses:

• They were bureau­crat­ic and time-con­sum­ing and there­fore unpop­u­lar with man­agers and employ­ees alike.
• Employ­ees dis­liked the tick-box exer­cise of receiv­ing a per­for­mance rat­ing, which distilled a year’s worth of work into a sin­gle label or num­ber.
• There was an issue with recen­cy bias where­by an employee’s recent achieve­ments (or fail­ures) skewed the judge­ment of their man­ag­er. This lured savvy employ­ees to ​‘gam­i­fy’ the process which further dis­tort­ed the results and led to inef­fec­tive and unfair out­comes.
• Evi­dence has shown per­for­mance rat­ings have no rela­tion to orga­ni­sa­tion­al per­for­mance. This was evi­denced in a NeuroLeadership Institute report which gath­ered more than 23,000 employ­ee ratings from 40 com­pa­nies and found no sign that rat­ings had any effect on prof­its or loss­es, reach­ing the damn­ing con­clu­sion that ​“per­for­mance rat­ings have no rela­tion to orga­ni­sa­tion­al per­for­mance whatsoever”.

Giv­en these sig­nif­i­cant flaws, why have per­for­mance reviews con­tin­ued to sur­vive in 80% of companies? Per­for­mance reviews are hard for organ­i­sa­tions to dump because they ful­fil two key purposes: they pro­vide the forum for a ded­i­cat­ed dis­cus­sion about an individual’s per­for­mance and devel­op­ment, and they enable employ­ee per­for­mance to be mea­sured and assessed. So, though they may be flawed, they are bet­ter than nothing.

An alternative

Many organ­i­sa­tions can solve this conun­drum by adopting a con­tin­u­ous per­for­mance man­age­ment approach. Data can be gath­ered from the inter­ac­tions staff have had with their man­ag­er over the last 12 months, includ­ing check-in con­ver­sa­tions, goals, and real-time feed­back.

Adopt­ing a con­tin­u­ous approach means that man­agers and employ­ees have check-in dis­cus­sions frequent­ly through­out the year, pro­vid­ing a reg­u­lar forum for  dis­cus­sion about an individual’s performance and devel­op­ment. At the end of the year they can use the data gath­ered from these discus­sions to com­plete a tar­get­ed performance snapshot. This pos­es a small num­ber of specific questions to iden­ti­fy key employ­ee met­rics around per­for­mance, top tal­ent, pro­mo­tion readi­ness or suc­ces­sion plan­ning.

Employ­ee per­for­mance can be mea­sured and assessed based on infor­ma­tion served up by technology. This means that organ­i­sa­tions can make fair, fact-based deci­sions on staff ratings.

The outcome is a sim­pler, more engag­ing process which dri­ves high per­for­mance and engage­ment from the employee, while deliv­er­ing cred­i­ble, mea­sur­able met­rics based on evi­dence built up through reg­u­lar check-ins.

Most staff would be hap­py with this new sys­tem, as it is easy to under­stand and should give a fair­er pic­ture of their per­for­mance. Employers must com­mu­ni­cate any changes to performance management structures as ear­ly as pos­si­ble and explain why they are mak­ing the changes.

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