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Is it time to say goodbye to the dreaded performance review?

The demise of the annual performance review is imminent, according to recent headlines about various multinationals announcing changes to their employee appraisal process. Many experts are scathing of this traditional corporate rite.

“They should be thrown out,” says Dr Tim Baker, author of The End of the Performance Review and director of Winners At Work, who dismisses the performance review as outdated. “There should be performance development, not appraisal – and there isn’t enough time to do development when you’re busy filling in a form.”

Alec Bashinsky, Deloitte Australia’s national partner, people and performance, says an annual review is “bad for the employee and bad for us as an organisation”.

But if you ditch the annual performance review, how do you encourage continuous staff improvement?

Regular feedback from managers

The answer, according to Baker, is ongoing feedback through short, sharp regular conversations. “The best thing is to throw appraisals out and replace them with regular one-on-one discussions.”

Jon Windust, chief executive of HR software provider Cognology, argues an approach that sets expectations and provides continuous feedback and development is the natural successor to traditional appraisals. “It should be a forward-looking process, not a backward-looking review,” he says. “It should be about what needs to be done, not what has happened.”

These ideas are being implemented by organisations such as Accenture, which is now focusing on giving employees timely feedback from their managers on an ongoing basis.

The best thing is to throw appraisals out and replace them with regular one-on-one discussions.

Announcing Accenture’s new Performance Achievement system, chief leadership and HR officer Ellyn Shook said it provides “real-time, frequent, forward-looking coaching discussions that help people understand expectations, build on their strengths, identify areas for growth and achieve their career aspirations.”

Deloitte is currently piloting a similar approach focused on “continuous conversations” and rapid response to employee issues and development needs.

“It is a strengths-based framework,” Bashinsky explains. “We want to get our managers to be better coaches and focus on the strengths of our people.” The Deloitte framework involves a mix of weekly or fortnightly conversations “with no forms, nothing written down”, quarterly performance snapshots, and an eight-question pulse survey for employees. There is also a four-question performance check-in for managers.

Early feedback from the US has shown superior engagement for employees using the framework and the longer that it is in place, the higher the engagement level, Bashinsky says.

The problem with reviews

Although the new approaches sound appealing, most of the problems associated with appraisals have historically been around measurement practices and human biases, according to Dr Dale Tweedie, senior research fellow at Macquarie University International Governance and Performance Research Centre.

“The problems are not around timing of the review, but in the structure of the process itself. Yearly discussions about career progress are sensible, as is a review on project completion, but measurement has the same problems whenever it is done,” Tweedie argues.

To achieve a better result, Tweedie believes organisations need to clearly identify exactly what they hope to achieve from the process. “You need to link the performance appraisal process to its actual aim or purpose.”

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