Performance review alternatives to the traditional approach

The traditional approach to performance appraisals has long been in need of a rethink, with some smart companies looking at performance review alternatives. The formal, top-down annual review process, one that’s heavily tied to past performance to determine rewards or penalties has often irritated managers as much as it has stressed employees. And it’s unclear whether it has even yielded the intended results.

This is not an argument against personnel decisions being made with a systematic approach to measuring employee performance. Most organizations need a review process to compensate employees, identify areas of improvement, set new goals, support succession planning and a lot more. It also allows time for managers and team members to sit and talk without the interference of everyday tasks.

But the traditional model has been losing ground and some companies like Adobe abandoned annual reviews altogether. Whether you’re ready for this radical shift or you would like to make your existing process more efficient, you can give some thought to the format, frequency, tools or culture of your performance management process.

Here we provide some fresh ideas on how to improve performance appraisals and make them more effective:

Rethink the system

Adobe found that their annual performance review process wasn’t delivering. When the dreaded time came, managers were overloaded, team members dissatisfied and opportunities for improvement were being passed up. A radical change was in order. Other companies like Accenture, Deloitte and Netflix also made a shift away from this approach. Even General Electric, once a strong advocate of the traditional system, recently substituted the annual review with an app for regular feedback.

Think about whether your employee reviews really work. There are some things that should characterize every performance appraisal system. Do employees know what’s expected of them? Only half of them do, according to a recent survey. No matter what system you want to use, make sure to start with the basics: clearly defined employee performance goals.

What does performance appraisal mean to your company? It’s common practice if, once a year, a manager sits down to score all their team members according to a determined grading scale for different traits. Then, they may compare team members with each other and use forced distributions. They identify the top 15% who may get a raise. They hold a meeting which usually involves a one-way conversation where employees may be disgruntled by negative feedback they weren’t expecting. Seeing the flaws in this system is easy.

Frequency

The first thing you should consider is whether once or twice a year is enough. Assessing past performance after a year or six months doesn’t help to identify performance issues before they become a problem and provide timely resolution. Mistakes or accomplishments from the beginning of the year may have long been forgotten. When it comes to constructive feedback and employee development, sooner is better.

Think about how often your company changes its operational goals or sets new ones. If you’re a startup or undergoing radical change, schedule frequent meetings with employees to make sure everyone stays on the same page and works towards the right goals.

Format

The performance review’s format is another story. Companies like Semco partners in Brazil, have attracted much attention for their innovative management approach. A democratic workplace doesn’t need performance appraisals at all; there are no standardized goals and self-managed teams can work on their own terms.

If you don’t feel ready to follow Semco’s footsteps, make a move towards improving your process. You can base your performance appraisal on meetings between manager and team member, whether they’re scheduled periodically or after a project’s completion. Those meetings should be informal two-way conversations and should be more focused on employee development rather than assessment. Don’t talk about career plans but performance improvements. Introduce effective coaching sessions that address the employee’s needs.

For formal appraisals, you can use formats such as 360 feedback. This kind of assessment doesn’t only include the manager as a source of evaluation but also peers, subordinates and even suppliers or customers. It’s deemed more objective and can have bigger motivational effect. Additionally, since superiors, peers and customers have different requirements, it allows for a more complete picture of how the employee is performing. Despite its drawbacks (e.g. it’s often time-consuming and difficult in administration), it’s worth considering as an alternative format.

You can also provide people with opportunities for self-assessment. People usually know their strengths and weaknesses. If there are differences in the way they see themselves and how their managers perceive them, a counseling meeting could help them resolve this.

Generally, the most effective performance review alternatives focus on employee development. Managers and team members should frequently seek each other to talk about the fulfilment of goals. Conversations shouldn’t focus on past performance but on how the future can become brighter for employee and company alike.

Find useful tools

A challenge of performance reviews is that they take too much out of manager’s time. So much so, that managers may find it difficult to complete other duties and therefore begin to doubt the value of the whole process. Luckily, technology provides many solutions. Tools like Asana allow for frequent monitoring of task completion and serve as reminders of objectives. For complete performance management, you can look into a wide variety of tools to find one that suits your company and can better serve your needs. Workable uses Small Improvements which helps in keeping track of performance, goals and valuable traits or noteworthy incidents. Getting rid of paper documentation is always a great benefit.

Related: 17 effective candidate sourcing tools

Work on the culture

Whatever decision you make regarding your performance evaluation system, you need to be aware that employee attitude and company culture matter for success. You may have to deal with managers that don’t take performance management seriously because it interferes with their everyday duties. You may also have to deal with employees who care more about getting a perfect score at the end of the year than they do their job.

The key to every new system’s implementation is communication. Make sure you communicate the purpose and goals of a revised approach to performance evaluation. Try to dissociate reward and punishment from performance reviews. Employees should understand that you place great value in them developing their strengths and dealing with their weaknesses. Managers will be the main facilitators of this process, even more so, when they see the benefits in the way they’ll be evaluated by their own superiors. Training sessions can help in improving their performance management and leadership skills that are essential for frequent coaching. Understanding what the employee wants from their job and what motivates them is vital.