According to Forbes.com, Europe’s biggest software maker, SAP, is the latest global company to have decided its annual review process was often counterproductive to the goal of constructive dialogue.
Human resources head for Germany, Wolfgang Fassnacht, said they found “Grading workers did not work. People are open to feedback, also to harsh criticism, until the moment you start giving scores. Then the shutters go down. The old system is too static and no longer reflects the dynamic circumstances we are operating in.”
Forbes went on to quote Graham Kenny, from Strategic Factors who warned against ditching employee reviews wholesale. He is quoted as saying “Regular check-ins are great, this ongoing conversation and coaching model, but we also need performance measurements. We need to be careful to not chuck out the baby with the bath water.”
My argument is that both Fassnacht and Kenny are correct. We need to replace the current review process with simple systems based on is ongoing conversation and coaching - while it works. And we need to understand this model will not work when performance goes pear shaped. That too has to be replaced with something else.
In my experience for this small percentage of people the ‘ongoing conversation and coaching model’ should be replaced with a problem solving model. One that shows the employee how their behaviour causes a management problem with a conversation . Then adopt a goal of turning around the unacceptable behaviour causing the problem or terminating the employment arrangement.
While there are many vendors providing companies with performance management software that aim might to help replace the annual review process and support the ongoing conversation and coaching needs of the 98%, they cannot be effective at resolving the problems caused by the 2%.
This contemporary two policy approach is an alternative to annual review process as it successfully resolves unacceptable behaviour without impacting on the needs of the 98%. It has also been proven to deliver significant business outcomes including increased productivity, profitability, engagement, retention and compliance.
Remember as Graham Kenny says, while the evidence against the old approach is over-whelming and growing daily, we need to be careful to not chuck out the baby with the bath water. Instead we need to update our approach to performance management to better suit our contemporary times.
For almost 20 years I have proven that better outcomes can be achieved when you base your policies, processes and supporting systems on the needs of the 98% rather than the problems caused by the 2%.