The face of performance management is changing across the world with leading organisations such as Microsoft, Deloitte, Accenture and General Electric streamlining their annual performance reviews, or even scrapping them. This trend comes from a growing perception that annual performance reviews might not be the best way to manage and improve performance in the workforce.

Perhaps the question isn’t whether we should abandon performance reviews, but rather how we can do them better. Rather than treating it as a dreary exercise in complying with policy, we must think about how we as leaders and HR professionals can drive a culture of continuous feedback where every interaction can build commitment, engagement and productivity. At Sage, we are wrestling with these matters ourselves. We know that the world of work is changing, and we are striving to position ourselves at the forefront of good practice for HR.

Research from CEB HR Leadership Council, a multinational corporate management company, shows that 77% of HR execs believe performance reviews don’t accurately reflect employee performance; there is also not much evidence to show that performance reviews have a positive effect on business goals.

Yet CEB’s research also indicates that one should not be in too much of a rush to scrap annual performance reviews or ratings. Many organisations that completely do away with performance reviews see productivity decline; what’s more, employees tend to rate their conversations with their bosses lower in the absence of a formal performance rating.

Structure is needed

What this shows is that some of us resent structure when it’s there, but crave it when it is absent. Sure, scrapping performance reviews frees everyone from a process that can be viewed as a tick box exercise, but it also means that the business lacks a formalised programme for linking people’s goals and performance with the strategy of the business. It’s hard to be fair and consistent without a formal process.

Taking a step back, performance management is about helping employees set career goals, correcting any performance issues, and ensuring they have the tools they need to do their work. Even with the best intentions, much-needed performance interventions may fall by the wayside if they are not documented and actioned.

Perhaps the question isn’t whether we should abandon performance reviews, but rather how we can do them better. Rather than treating it as a dreary exercise in complying with policy, we must think about how we as leaders and HR professionals can drive a culture of continuous feedback where every interaction can build commitment, engagement and productivity.

Feedback should be constant

One answer that keeps coming up to the question of better performance management is that it should not simply be an annual process, but that it should allow for more frequent feedback. A PwC study reveals that 60% of survey respondents (and 72% of those under age 30) wanted feedback every day or every week. 

This makes enormous sense – employees should be learning all the time, their managers should be constantly providing feedback on performance and encouraging positive behaviours to ensure the  employees’ performance and goals are in alignment with its strategic objective. Annual performance reviews are useful in this regard, but they’re not frequent enough in a business world where the pace of change is so fast.

Here are a few ideas about how organisations can roll out a more agile approach to performance management:

• Set clear expectations: Have clear performance goals that are linked to the overall business strategy with objective metrics, so that employees understand what is expected of them.

• Provide feedback more often: A single performance review session each year is not effective and regular feedback and discussion should be the norm. In addition to formal feedback sessions, encourage managers to have monthly or even weekly check-ins with their teams.

• Keep it simple: Get rid of those long performance review sheets and focus on the most important questions and metrics.

• Look forward rather than backwards: Rather than dwelling on past glories and failures, focus on what the employee can do to grow in his or her role and how the business can support the person’s ambitions and performance.

Whether you’re a business builder or an HR professional, you’ll appreciate that it takes hard work and continued effort to build a high performance culture. You should consider every interaction as an opportunity to influence your employees’ performance in a positive way to build commitment, engagement and achievement of the desired results.

By Anja van Beek,

Vice President for People (HR), Sage International (Africa, Middle East, Asia & Australia)