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The Six Disciplines Blog


Friday, December 01, 2017

The Annual Performance Appraisal Is Dead (Long Live The Performance Appraisal!)

Digital technologies have radically impacted our personal lives and our experiences at work. The way we manage, lead, collaborate, and organize ourselves is undergoing radical change.

If you’re in HR, you’re aware of the quick demise of the annual performance review process, spearheaded by some of the world’s largest enterprises.  Over the past few years, GE joined other high-profile companies like Microsoft, Dell, Accenture, Adobe, and IBM, that have already gotten rid of formal annual performance reviews.

Take a closer look at IBM. IBM is replacing their old annual performance review process with a new approach, one that gives more opportunity to shift employee goals throughout the year and includes more frequent feedback. With the new system, IBM employees will set shorter-term goals, and managers will provide feedback on their progress at least every quarter.
Perhaps most interesting: at the end of the year, employees will be judged across five criteria-business results, impact on client success, innovation, personal responsibility to others, and skills.

Top HR/performance management analyst, Josh Bersin predicts we’ll continue to see a major shift in many more companies, both large and small, as they move away from annual performance appraisals, and replacing them with more frequent feedback mechanisms – some refer to it as “continuous performance management”.

Ultimately, a top goal of any performance management system should aim at retaining a talented workforce. By replacing the traditional annual performance review with regular feedback, employees will be able to update and change their projects and goals more frequently, and correct their problem areas in a much more agile and constant basis.

Bersin predicts the tremendous shift away from traditional licensed HR software (including provisions for annual performance appraisals) toward modern, cloud-based systems and mobile apps will accelerate.

In fact, companies are now completely rethinking the way we manage people.  Millennials are asking to be promoted into leadership roles at a much faster rate, and the areas of recruitment, performance management, and online learning are now driven by the employee rather than solely by the HR department.

Because these changes happening so quickly, we’re watching the evolution of completely new ways to think about management itself, the role managers play, and the way teams work. It’s forcing us to rethink and retool our organizational cultures, our focus on core values and purpose, our need for continual alignment, and how we approach this new world of continuous feedback.

Six Disciplines is actively involved in reinventing the process of performance management. We’re laser-focused on delivering software apps that support real-time streams of performance feedback, employee coaching techniques, agile teamwork, and leadership development at all levels.  We invite you to look around our website, and contact us for a no-risk conversation about how we can make 2018 the best year ever for your organization.

The demise of the annual performance appraisal is just the beginning.  Hold on to your hats!  The journey continues!

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Since 2005, the Six Disciplines blog offers posts about performance excellence, strategy execution, business coaching, leadership development, innovation, and business process improvement. This blog has received prestigious awards for leadership and management and has been syndicated by several major media sources.