In our blog post last month about Performance Evaluations going the way of the Dodo Bird we discussed that major companies like SAP, Adobe, Accenture, Deloitte and Microsoft are throwing out their performance review programs.
The first reaction is what are they doing? Are they stopping performance feedback all together? Actually, a closer look reveals that these companies are doing away with their cumbersome and expensive annual performance review programs for something more nimble and timely. Companies are moving to more informal and frequent check-ins that focus on immediate performance feedback and growth/development discussions.
Most interesting is how employees are responding very favorably to more ‘on the spot coaching’ sessions rather than a formal annual performance review, which is too often used an as excuse to hold feedback until year end.
For companies considering this change, experts offer some cautions to help the process go smoothly. Don’t eliminate the process without another plan in place. Invest heavily in training of managers in how to speak about development with their employees. Managers will still want to document that these conversations have taken place, not only for employee development, but also protection against bias, and worst case scenario, a discrimination charge, so making sure your HR system can handle this continuous flow of feedback is important. That documentation will also be used in a ‘year end wrap up’ – another best practice recommended for companies eliminating the annual performance review.
Companies that have made thoughtful changes to their performance program, report significantly higher levels of employee satisfaction. In such a tight labor market, companies are doing anything they can to keep employees. Tossing out unsatisfactory practices that turn employees off, and replacing them with fresher, more relevant approaches is one way to ensure employees remain engaged.