Calls to ‘axe the appraisal’ are often misguided, suggests CIPD report



Regular conversations, and awareness of ratings bias, are more important than technicalities of performance management processes

The trend to move away from annual appraisals risks damaging employees’ development opportunities if businesses do not think more deeply about the performance conversations they conduct, according to a significant new study from the CIPD.

Could do better? What works in performance management contains a meta-analysis of dozens of academic studies into the topic, to help separate the hype from reality.

Over the past few years, companies in all sectors have begun ditching the annual appraisal process, following the lead of Microsoft, Deloitte, Expedia and others that have publicly rejected traditional performance management methods. This reflects a wider dissatisfaction: a small-scale 2015 CIPD survey of senior HR leaders found that 55 per cent of them did not consider annual appraisals effective, a view shared by 73 per cent of business leaders.

But the new study suggests feedback makes a net positive contribution to performance at work – though there is a huge variance between different types of feedback, and much literature on the topic is misunderstood.

“We need regular performance conversations. We shouldn’t be scared of them – we’re crying out for feedback,” said Jonny Gifford, CIPD research adviser for organisational behaviour, and the report’s author. “Although people tend to hate the performance appraisal process, that’s often because of how it’s carried out.

“One of the points of conflict is between the ‘appraisal’ as a formal process, and the broader idea of performance appraisal – which means feeding back and judging performance in a systematised way. It’s crucial we feed back to people on how they are progressing towards their goals – and in calling to axe the appraisal, it’s often unclear what we’re calling for.”

The report suggests that regular, less formal conversations are particularly effective – as it puts it, “performance management should be seen as a continuous chain of connected activities, not as a discrete process that is occasionally revisited” – and that the medium of these conversations isn’t especially important. It can be just as effective to update people on their progress towards defined goals using an app or digital dashboard as it is through a face-to-face conversation, as long as it takes place as part of a more holistic process.

The concept of ranking is indelibly linked with performance management, even though the days of ‘forced ranking’ are less common, but the report finds this is an area fraught with the potential for bias. This includes managerial bias (for example, because managers rate employees who they hired or recommended, or who they like on a personal level, more highly), and bias against individuals who are introverted, as well as biases introduced into the process by employees themselves – for example, through ingratiation and self-promotion. This is another reason self-assessment in the performance management process is generally best avoided, said Gifford.

The report makes a number of recommendations for improving the experience. Most importantly, it suggests a clear distinction between processes and conversations conducted for administrative purposes (to make decisions on progression or performance-related pay), and those that are related to broader personal and professional development (getting better at your job). “These two ways of using the appraisal work very differently on a psychological level,” said Gifford. “There’s a very good argument for tying appraisals into some sort of annual administrative process, such as a reward process, but it’s not just about that – it’s also about how you develop people.”

Following up on conversations is crucial to ensure lessons are learned and momentum towards key goals is continued. Finding out how an employee has reacted to feedback, and what they intend to do about it, is every bit as important as the nature of the feedback itself. A sense of unfairness, in particular, can scupper performance management before it has even begun, says the report: “If an employee feels unfairly treated, unsupported or demotivated the day after an appraisal, performance management could unravel at that point and it’s clear more conversation or action is needed.”

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