Why the annual appraisal isn’t dead
Whilst the traditional approach to yearly appraisals has been updated, modern performance management processes still require a concluding review for the end of each annum.
Over 70% of employees work in service or knowledge-related jobs – their performance is driven by their skills, attitude, customer empathy and their ability to innovate and drive change by working through teams . These skills are often developed overtime, and it is therefore crucial that performance management supports the development of these capabilities rather than making mere judgements based on a specific snapshot of time.
Furthermore, due to the uncertain and ever-changing climate, business priorities rarely follow the traditional evaluation cycle. Goals shift, strategies evolve, and employees may work on various projects under various team leaders at any one time. Due to this dynamic and agile working environment, it is unsurprising that modern employers have reassessed their performance management process.
The process of continuous coaching and improvement should ultimately lead toward the annual appraisal, whereby managers coach their team members towards an evaluation. This evaluation should help make business decisions such as professional development, promotions and possible pay rises. However, rather than directly linking these decisions in the ultimate end-of-year appraisal, managers are able to make compensation decisions based on the employee’s development across the course of the year.
Studies have shown that whilst employees need to be made accountable for the results they produce, people perform best when they are given the tools to succeed and the coaching to improve performance .
In order for the entire performance management system to be effective, companies should:
1. Get senior leaders involved
By involving managers, the business can explain what they hope to achieve as a result of performance management activities, from monthly one-to-one checks-ins to the concluding end-of-year appraisal. In doing so, managers will be able to understand how this will reinforce their team’s talent management strategy.
2. Build skills
Organisations should provide employees at all levels with practical steps that they can follow in order to reach the next level of achievement within the organisation, and provide managerial support for every employee’s professional development.
3. Teach managers to give smarter feedback
Feedback should be constructive and helpful in both regular check-ins and the end-of-year review. These informal, productive conversations will drive improvements internally and motivate employees .
4. Simplify the process
Reduce the number of paper forms for both regular check-ins and the review. In bringing the process online, information can be collated and referred to at a later date, ensuring that any achievements aren’t diminished overtime.
Ultimately, the end-of-year review is critical to the entire performance management process as it helps organisations to make informed business decisions based on regular evaluations and coaching given to employees throughout the year.
Modern workers expect to be held accountable for results  but they also expect coaching, development and regular feedback. By shifting the focus from a simple ‘evaluation’ to ‘development and performance improvement’ , organisations can expect appreciable results.
 Deloitte, ‘Performance management is broken’, 4 March 2014