New HR study finds for continuous appraisal over annual performance reviews.
Top performing employers are shifting away from traditional annual performance reviews in favour of a more agile and collaborative appraisal process.
Forced performance rankings of employees are becoming a thing of the past. Instead, top performing employers are tending towards transparent goal setting and regular feedback that is part of simpler and less formal performance review process. This is the conclusion of the Performance Management Report published by the Top Employers Institute.
The Top Employers Institute globally certifies excellence in the conditions that employers create for their people. The study is based on a global HR Best Practices Survey among a sample size of 600 companies in 99 countries.
Of these companies that achieved the Top Employers certification, 91% are now consistently re-aligning performance goals during the year in response to changing business needs, which marks a major shift away from the traditional annual review, towards providing ongoing feedback.
Traditional performance measurement seen as over-engineered
While employers consider it important to measure performance, current processes are seen as too complex and over-engineered, reliant on rating scales that are perceived as no longer fit for purpose in the current business climate of complexity, uncertainty and volatility. The survey shows a trend for employers to offer coaching and development opportunities, rather than rankings.
David Plink, CEO of the Top Employers Institute, says, “A key finding of our study is that performance management evolves from an annual event with rigid objectives to a transparent process of continuous dialogue, with flexible goals, that is embedded in day-to-day operations so it can better deal with change. Companies that become Top Employers redefine performance as the ability to collaborate and contribute to the success of a team. We are definitely on the verge of a paradigm shift in the way we look at performance management.”
Previously, the focus for performance management had been on the individual and individual tasks. But as many companies foster a more connected and team-based working culture, key capabilities are now social awareness, agility and flexibility so that top performing companies aim to assess the effectiveness of employees in the broader work environment.
As a consequence, Top Employers are increasingly encouraging their teams to be more involved in their own performance management so they can feel in control of their progression. These companies have realised that an inclusive approach helps support a high performance culture which helps accelerate the company’s strategy.
Lisa Dodge, Director Global Performance Programs and HR Africa at Microsoft acknowledges, “We redefined performance as the impact an employee has on a team.”
Microsoft, a certified Top Employer Africa 2015, has completely overhauled its existing approach by removing all ratings in favour of a new, conversation-based approach to performance. Dodge says, “Traditional performance management was not going to get us where we need to go. We redefined performance as the actual impact an employee has on a team, business or customer.” In Africa, Microsoft is a certified Top Employer in Egypt, Kenya, Nigeria and South Africa.
Finally, the survey highlights a weakening link between performance management and compensation, with only just over 10% of participants considering an important objective of the process being to provide a basis for salary increases. This shows how the overall objectives of performance management are changing. A rigid link between performance and pay enforces a strong emphasis on individual performance, but is not effective when looking at an employee’s contribution to the performance of the organisation or the development of other employees.
The full Performance Management Report can be found here. There are ten organisations that earned the title of Top Employer Africa, with some 58 operations certified in 25 countries on the continent. More than 960 Top Employers were successfully certified globally in 2015.
Samantha Crous is the Regional Director: Africa and Benelux at the Top Employers Institute (TEI), www.top-employers.com.
This article appeared in the October 2015 issue of HR Future magazine.
