Most of us have had one, few look forward to them and, when all’s said and done – does anyone really benefit? The annual performance review is a hot topic in the world of HR since the consulting firm Accenture announced it would pull annual performance reviews from this month.
Many more household names have followed suit, including General Electric and Deloitte, opting to instead implement more fluid systems where employees receive timely feedback from their managers on a more regular basis. In fact, more than 10 per cent of Fortune 500 companies have discarded the annual appraisal system according to the Institute for Corporate Productivity in the US, so should UAE HR directors take note?
“The world is now a global workplace and it wouldn’t be fair to say a UAE organisation should be approached differently in terms of performance management than anywhere else in the world,” says Hilary Curry, an implementation change manager and coach, who works for a UAE-based corporate,
The clincher for Deloitte’s big decision was an internal survey in which 60 per cent of its employees felt yearly performance reviews were useless. In addition, CEB, a best practice insight and technology company representing 300,000 employees globally, found 95 per cent of managers are dissatisfied with the way their companies conduct performance reviews. It also reported nearly 90 per cent of HR leaders say the process fails to yield accurate information.
Like time and motion studies from a bygone era, will performance management systems one day be sniggered at, or dismissed as something we used to be dragged through every year to sing for our bonuses?
Well perhaps not. Ms Curry says the performance review isn’t dead – it is simply evolving to better suit the modern organisation.
She believes it is still essential within most large and complex organisations to monitor performance and establish promotional paths rather than as a mechanism to offer structured rewards.
“Some organisations may still require a more traditional style, while others may not and the goal is often to drive a cultural shift. Organisations will vary depending on many factors, such as industry and corporate culture – the key is finding the right balance,” says the former Accenture consultant.
Triptta Neb, director of leadership training at the UAE leadership training outfit CLCC, believes performance reviews can be successful if implemented properly.
“Annual appraisals were always meant to provide overstretched managers with a formal opportunity to document conversations they should be having with their team members on an ongoing basis,” she says. “However, because organisations insist on relating performance management systems to bonuses and rewards systems it is very rarely used objectively.”
It has been proven many times over that intrinsic motivation leads to the most efficient performance. In fact a study by MIT for the US Federal Reserve bank showed rewards in jobs involving any level of cognitive skill can even lead to reductions in performance.
“Implementing an intrinsically motivating framework in an organisation is comparatively more challenging and is measurable only over a few years,” says Ms Neb. “It is much easier to put in a reward scheme linked to an annual review and measure its short-term effectiveness, to show ‘the board’ the required results.”
One of the leading telecommunication distributors across the Middle East and Africa is flourishing under its company-wide performance management system tied to bonuses.
Midcom Group employs more than 1,200 employees, with two-thirds in customer-facing roles and the rest providing back end support. Nidhi Chauhan, the group’s chief HR officer, delivers performance management and feedback tools across all levels of the organisation. However, in line with the trend away from annual reviews, Midcom’s “critical to business success” areas are measured quarterly.
“Managing performance and capability building for teams is an important accountability assigned to each business leader for creating differentiation to announce performance awards. It is very successful for us,” says Ms Chauhan.
“As a growing organisation we also have ample opportunity to offer challenging roles to our young talent and are firm believers in offering internal growth opportunities to our top performing employees. The assessments help us in identifying employee potential, so we can explore wider or next-level roles and special projects for them.”
At the other end of the scale is regular feedback, which has the potential to generate almost constant pressure through deadlines and micromanagement. Progressive companies may well look for the point between these two extremes that work best for their own mix of industry, workforce and corporate culture. As Ms Curry adds: “It is about finding the best, modern solution for each organisation.”
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