Julie Windsor, Managing Director at Talentia Software UK, explores how the annual appraisal is changing and whether it still has a valuable role to play in modern business.
Annual appraisals for employees are not yet a thing of the past but the frequency and formality of the process is changing. This was the opinion of over 80 percent of respondents to a recent survey of senior HR Directors and Managers conducted by Talentia. This finding supports the view that while the annual appraisal is not yet dead per se, it is in a state of transition.
A fundamental reason behind the evolution of appraisals has been the quickening pace of life and business and critically the shift in how we share information with one another. Social media’s rise has been key to this; in our personal and professional lives, we are now encouraged to openly share with people in our networks on a regular basis, and have become accustomed to frequent and transparent two-way dialogue.
Against this backdrop of changing mindsets, it is clear that a siloed approach to the annual appraisal cannot deliver on employees’ expectations of ongoing corporate transparency and also meet changing business needs. Organisations evolve rapidly, and as such the setting of one set of annual objectives no longer fits with today’s fluid world.
Setting objectives to meet shifting business priorities
The modern appraisal should be more involved than just reviewing an employee’s ability to perform the key responsibilities of a given role, which may not necessarily correlate with shifting business priorities. Rather, it should focus on setting shorter-term objectives, closely aligning employee targets with corporate goals in order to make the process beneficial for both the employee and the business.
A critical issue for UK businesses is staff retention – 75 percent of UK employees have applied for a new job in the past year. Furthermore employees are more aware than ever before of their market value. To enable businesses to nurture and retain their talent, regular dialogue is needed to review individual business contribution and goals, and address related issues. In addition, appraisals also play an important role in reinforcing corporate values, which means that corporate aims and objectives need to be cascaded down to individuals regularly to reflect the evolving challenges within the business.
Data is central to the modern appraisal
A key factor to consider is the wealth of information that is readily available within firms; as such, today’s appraisal process should have data at its heart. Human capital management solutions provide clear information to managers in a consistent way, using the same framework, enabling high performers to be identified and nurtured accordingly and all individuals to be appraised in a similar fashion. The use of appropriate technology will also provide reliable data for salary analysis, and ensure that remuneration offered to staff is in line with the sector and role, making sure that achievements are appropriately recognised to aid retention.
As our survey identified, it is increasingly apparent that the annual appraisal is an outdated principle – but only if it is delivered in isolation. Organisations do not need to eliminate the annual appraisal as such; it is still a valuable and established measure for reviewing performance, career paths and personnel issues in depth and in a trusted, confidential environment. However, in today’s fast-moving business climate, appraising staff should be a continual process. A year is simply too long to wait and much can happen during this period.
Julie is Managing Director of Talentia Software UK, a leading international supplier of HR and finance software solutions.