Traditional Performance Management is Dead – But Here’s Why You Shouldn’t Mourn for It Just Yet

by Roger Longden | May 01, 2016

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Those who know me well know that Performance Management is an area of business I feel passionately about – it forms the cornerstone of my recent research paper, in which I explored how to revolutionise the approach businesses take towards PM systems. The paper came partly from this passion, and partly from frustration at the ‘traditional’ Performance Management systems which businesses continue to embrace. Thankfully, however, I can now announce their decline – but don’t be fooled: it’s not time to mourn just yet!

The Ups & Downs of Annual Appraisals

Perhaps the most recognisable component of traditional Performance Management systems – and a point of focus for those arguing against its usefulness – is the annual appraisal. Although there is some arguing that they are an efficient tool for measuring performance, there is actually far more evidence pointing to the contrary.

In order to do their employees justice, employers utilising annual appraisals must give equal time to each individual, have done a significant amount of research on their work, and offer personal and professional development opportunities as standard. Unfortunately, none of this is possible when employee numbers start to climb, and even with small numbers it’s difficult to monitor how individuals have developed between each assessment due to the lengthy timescales involved. When stripped for the world to see, annual appraisals offer very little to the business and its employees, but is only one such reason why tradition needs to be abandoned.

Speaking Up Against Tradition

For a moment, let’s look back on the origins of ‘traditional’ PM systems to truly get a sense of where the name comes from. The sense of ‘tradition’ behind the system so many employers continue to use, originated in the workhouses of the 1800s. For owners, managing their workers’ performance was as simple as assessing their output versus time taken and costs involved. Without the strict employment laws we’ve come to be protected by today, underperforming workers could be kicked out with no notice – their individual development was of no consequence to their managers.

Fast-forward back to the modern day, and employees are being compared against arbitrary objectives, as well as their colleagues’ performance, on an annual basis, without the opportunity to grow; it’s therefore unsurprising that staff turnover has also survived this long!

But in recent years, employees have started to speak up. During the research for my paper on PM systems, I discovered that 79% of employers thought that Performance Management was poorly received in their organisation, following feedback from their teams. In addition – and as I mentioned in my last article – employees in the 21st Century prefer to be invested in, with research into Millennial behaviour cementing the idea that development opportunities breed greater loyalty and lower staff turnover.
But before we lower the coffin completely, there’s one more question to consider: if this is truly it for Performance Management, then what comes next?

Welcoming the Next Generation

For those who read my last article, don’t panic: I still mean it when I say Performance Management is worth investing in. Where investment shouldn’t go, however, is into traditional systems which include annual appraisals and their inefficient ilk.
Instead, businesses should take this opportunity to build a new system which works to encourage – rather than undermine – employee development. To get this system right, it’s important to take note of nine key elements to a successful Performance Management process. In my next article, I’ll be talking you through these elements and how your business can embrace them for great results.
In the meantime, more homework: if you undertake annual appraisals, here’s a chance to seek honest (and anonymous) feedback from your employees to gauge their sentiment. If you feel like sharing and talking further on the subject, then please don’t hesitate to connect with my on LinkedIn – I’m always happy to talk about Performance Management!

For a more in-depth look at the pros and cons of ‘traditional’ Performance Management and how it could be holding your business back, download a free copy of my research paper, available on the There Be Giants website.