Employee EngagementRecognition & Rewards

An Underperforming Process

Turning annual reviews into a year-long assessment can transform mere box-checking into a strategic asset.

By Tim Payne

The year 2012 was when the knives really came out for the traditional annual performance process. Experience of our clients and within KPMG suggests that the classic approach does not always have the effect intended. It’s a more than legitimate question to ask whether your performance management process is an exercise in compliance and form filling, or a genuine tool
to align performance to strategy and build engagement and motivation.

There is a growing buzz about a different approach to performance management that involves various combinations:

• A social approach;

• A more time-flexible, project or customer-focused approach;

• A real-time emphasis on feedback and recognition; and

• A nod toward the growing importance of internal/external online reputation.

Where is the buzz coming from? A number of places. First,
HR systems vendors. No product release is complete without integrated social features, and it is known that talent suites including performance management are the hottest of hot product sectors.

Some high-profile organizations have moved away from classic performance management or announced they will. Facebook uses work.com (see a social approach below). Motorola Solutions recently announced they are abandoning the annual appraisal. Unsurprisingly, the early adopters seem to be the high-tech companies with staff glued to a laptop and on social networks.

There is also legitimate concern in some organizations that
the annual appraisal process has become an exercise in process compliance rather than a genuine tool for driving better, more aligned performance, and more engaged and satisfied workers. Here are some newer strategies:

A social approach. Social performance management systems
like work.com (and Workday, Oracle Fusion, SuccessFactors, PeopleFluent with SocialText, and SilkRoad) enable the setting and sharing of team goals, linked to a particular program or sales account. Individuals on the same team can see each other’s goals, and can receive and provide feedback on those goals. Some offer integration into an internal social network, e.g., sales chatter for salesforce.com, or other system such as Yammer, so people can share their goals more widely if they choose.

A more flexible approach. Rather than set objectives and then revisit them once or twice a year, these systems encourage outlining objectives around key projects and then recasting new goals when the next project starts. At the end of the year, all of the progress rating and feedback is collated in one place.

Real-time feedback and recognition. New technology allows individuals to ask for and receive feedback in the moment. They also allow managers to recognize people in real time, either through praise or points. Some programs include an element of gamification to encourage the giving of feedback, and a feedback culture. Facebook has integrated work.com with the compensation module of Workday so performance ratings flow through into compensation modeling.

Reputation. Silicon Valley thought leaders talk about the increasing importance of your online reputation. Some are starting to think that—particularly for knowledge organizations—internal online reputation, or a combination of internal and external online reputation, will be the greatest indicator of your performance and value to the business. The wisdom of the crowd (or crowdsourcing) should identify those who are truly adding value. Quantifiable items, including the number of times you give feedback online, the amount of “thanks” you get or “likes” your articles and posts receive, the number of re-tweets and total connections you have are indicators of your worth in a connected workplace.

To make any of this work, organizations need to use a certain amount of technology, and also a lot of work on culture and mindset. For many U.K. and European companies, these features would represent a very different way of managing people.

There is also the need to somehow link performance to pay. While many are saying they are doing away with the annual appraisal, this can be taken to mean they are focusing more on ongoing objective setting, feedback, and recognition, but are still having something at the year-end. So they are not doing away with the annual process altogether. It makes sense to challenge whether such a fluid approach to performance management is right for your particular company, industry, or workforce.

Tim Payne is a partner in the global center for HR transformation for KPMG in the U.K.

Tags: Engaged Workforce, HRO Today Global, Performance Management Rewards

Recent Articles