Killing annual appraisal review is no answer to low engagement of employee

Looking at past trends, it is obvious that performance management needs a change. Yet, replacing the traditional models and not having a planned process has backfired

Organizations are eliminating annual appraisal reviews as they are not considered effective enough. Looking at past trends, it is obvious that performance management needs a change. Yet, replacing the traditional models and not having a planned process has backfired. (Photo/Agency)
Organizations are eliminating reviews as they are not considered effective enough. Looking at past trends, it is obvious that needs a change. Yet, replacing the traditional models and not having a planned process has backfired. (Photo/Agency)

Performance management has been undergoing a sea of transformation. Organizations are eliminating  reviews as they are not considered effective enough. Looking at past trends, it is obvious that needs a change. Yet, replacing the traditional models and not having a planned process has backfired.

In 2015 and 2016, big-name companies such as Deloitte, Adobe, Accenture, GE, and SAP announced plans to remove the performance review. This led many others to follow it. Yet, when the results are being evaluated after a year, not every company that vowed to kill annual reviews has seen the expected results. In fact, some have found that employee performance and engagement have dropped.

The traditional models need to give way to newer innovative models. Companies need to design a strong alternative to make the transition successful. HR leaders will have to spend more time on data collection and change management in 2017. The core skills will get an update and low level skills will get automated. HR leaders will have to not only provide feedback and measure milestones on a scheduled basis, but they will also have to be predictive in approach. Hence, 2017 should see the rise of SaaS platforms for gamification and automation of employee engagement.

With the rise of employee engagement platforms for , and rewards and recognition (RnR), companies will look forward to re-engineered tools. These tools will put all the pieces of the employee development puzzle together. Yet, it is clear that at the start of the year, companies will shy away from subscription pricing. The cost of such tools will be accrued by services delivered.

So what key factors should the company consider for performance management?

According to surveys, 76% of employers have increased the emphasis on providing performance feedback. 34% organizations have established a process to capture and communicate real-time feedback.

Today, employees don’t want an unrelated excel rating where even if the project is a success, the employee gets a rating unrelated to his/her hard work. Employees expect companies to focus on enhancing their personal skills which, in turn, would speed up career and financial growth.

So what should companies expect from the new performance management models?

  • Performance should be linked to rewards and celebrating recognition. Each company has different reward and recognition patterns based on the nature of their business. It may so happen that their internal departments have different patterns. The model should thus be able to add a personalized touch to performance management.
  • The goal settings will have to be analytical rather than generic. It has to be public for each individual in the company. The model will have to let teams and peers collaborate to achieve the goals.
  • Once the goals have been set, the tracking mechanism plays a crucial role. It has to be easy and minimal time consuming. It has to adopt an advanced metric collection system, which links goals. Employees should be able to compare and upgrade their goals with respect to their peers.
  • The model needs to provide instant exchange of information between employees and managers. Surveys, polls and campaigns will help the team and managers to evaluate team engagement and effectiveness. “Pulse” surveys offer insights about when and why certain teams are under performing or might be unhappy or frustrated.
  • A feedback loop mechanism will come into picture where the tool will help employees deliver or request feedback. Often, this is integrated with email and other productivity tools, enabling continuous improvement.
  • Models will opt for suggestive or predictive mode using machine learning and Big Data. Tools will look at the performance and, based on artificial intelligence, will encourage coaching and training.
  • The model should support career development and enhancement. It should recommend new jobs based on an individual’s internal experiences with job mobility and his prior success in the company. The salary parity has to be maintained.
  • The model will have to account for automation in workforce. Most of the work will be via smart solutions and hence the tool needs to integrate and collect data from various sources.

The author is Co-Founder of

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Bill Fotsch
The problem with individual employee feedback, annual or otherwise, is that business tends to be a team sport. Sales depends on production which depends on engineering, and so on. Empower employees to think and act like owners, driving and participating in the profitable growth of the company, and you will see engagement and profit growth. Industry leaders like Southwest Airlines, Capital One and BHP Billiton, (clients of mine), and hundreds of private companies treat their employees like trusted business partners, enabling them to make more money for their company and themselves. They consistently see both profits and engagement soar. This… Read more »
Abhishek Kumar
This is the right way to move as of now. Associating people as owners gives much better capability and control over business as everyone feels accountable. Many big companies have been making these changes where they have been breaking large teams to smaller teams and making them run as start-ups with allocated funds. Adding rewards system to this helps as people feel their success is being celebrated across the company and not limited to their teams, giving it a feel of free PR inside itself. This keeps people motivated and push for more. Most of our(Xoxoday) clients are moving towards… Read more »
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