Last week, while browsing on Facebook, i encountered a story about a certain company ditching out its employee’s annual performance review. I was shocked and at the same time interested to know the reason why this company fearlessly decided to remove their yearly evaluation. It was indeed a bold move for that company.
One of the main reasons why this company opt to remove performance review is:
Rather than having managers rank and review workers once per year, the new initiative — called Performance Achievement — calls for informal reviews that can be given at the manager’s discretion, for example, after a worker has completed a specific project.
“……. The new system is intended to give workers more opportunities to get feedback from managers and coaching to improve their performance. The new system will still be used to inform decisions made about compensation and promotions, Jones added.
Companies have been doing performance appraisal every year to identify and achieve the team member’s individual KPIs. Performance appraisal is also being used to identify strengths of the employee or identify those areas that needs improvement. In short, this process is for evaluation and developmental purposes.
As an HR practitioner, i know the purpose and importance of performance evaluation. Some may perceive it differently or positively, as follows:
- It encourages employees to perform better in the future
- It presents an opportunity for employees to leverage positive performance for an increase in salary or promotion
- During the appraisal, employees can discuss strengths and weaknesses with a supervisor, in effect, allowing employees to discuss personal concerns
- It provides communication between a supervisor and employee on a regular basis to discuss job duties and issues with work performance
- It allows employees to identify what skills may be lacking and need to be acquired or improved upon. There are instances when education provided by the company is a necessity to advance success overall
- It holds employees accountable for their job performance, and since the employee knows that an appraisal is coming, the employee has the opportunity to prepare in advance
- It provides the opportunity for managers to explain organizational goals and the ways in which employees can participate in the achievement of those goals( http://www.atessabenefits.com/atessa-blog/understanding-the-importance-of-performance-appraisals/)
The most challenging aspect of a performance appraisal is measuring the actual performance of the employee since performance will be based on actual vs target. The process itself is time consuming especially if you have several employees to be evaluated, sometimes twice, in a given year. In several instances due to the number of employees to be evaluated and lack of time management there were employees whose evaluations have been compromised and completed for the sake of compliance. You’ll only get to know the scenario once employees started to make noise or manifest dissatisfaction.This leads to the pain points of performance appraisal.
Some pain points of performance evaluation as quoted in Yahoo’s article:
Criticism of performance reviews is ubiquitous among academics who study workplace management. Their main pain points: the system wastes time and money, alienates employees, and is all-in-all redundant, since any good manager is already keeping an eye on employee performance without a system in place. A whopping 95% of managers said they are dissatisfied with their performance review process, according to a 2014 survey of 10,000 workers, also conducted by CEB. Nearly 60% of employees said they felt reviews weren’t worth their time. CEB also estimates that for a big company with more than 10,000 workers, annual reviews can easily cost upwards of $35 million with less than stellar results. Ninety percent of HR professionals surveyed by the firm said they did not feel performance review results painted an accurate picture of workplace productivity. (http://finance.yahoo.com/news/accenture-is-the-latest-major-company-to-ditch-dreaded-annual-reviews-192428343.html)
Do we really need yearly performance evaluation?Is performance evaluation helpful to the business? Is it time to look for a more creative and practical ways of evaluating employees?
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