THE BLOG

The Annual Appraisal: An Archaic System In A Modern World

12/12/2016 15:28 GMT | Updated 12/12/2016 15:29 GMT

Traditionally, an employee's performance has revolved around their annual appraisal, the outcome of which usually dictates pay rises, promotions and bonuses. However, there is a growing trend amongst forward thinking businesses such as Microsoft and Accenture of ditching the annual appraisal altogether. Adobe, another to abandon the annual appraisal, calculated that the process required 80,000 hours of time from its 2,000 managers each year, the equivalent of 40 full-time staff. In addition to absorbing a huge amount of manpower, the value of the entire process is also under the microscope, with many staff finding the process demotivating and laborious.

Part of this shift in approach is down to the need for businesses to meet the expectations of millennials. The millennial generation, which will account for over 50 per cent of the global workforce by 2020, is quickly becoming the most influential cohort within companies around the world. What's more, they are now holding positions right across organisations, from entry level roles right through to senior management. Regardless of seniority, however, they have some very clear ideas around what their employer should offer, which in many instances is in stark contrast to the expectations of their predecessors.

For decades, staff recognition and subsequent reward, usually in the form of a pay rise, has revolved around the annual appraisal. However, momentum is building behind the consensus that the traditional appraisal is an archaic system which fails the needs of both employees and employers. This is supported by a recent study which revealed that 69 per cent of millennials see their company's review process as flawed. A major reason for this is because the annual appraisal can often create a feedback vacuum, where staff don't receive any feedback on their work for months on end as it is saved up for their appraisal. The survey also found that three out of four millennials feel in the dark about their performance, and nearly 90 per cent would feel more confident if they had ongoing check-ins with their boss.

Instead, businesses need to look at ways to establish systems which allow managers to recognise the impact and contribution of their staff in a timelier manner. This will require flexibility. No longer can businesses rely on a one-size-fits-all process, instead, a framework is required which allows managers and employees to interact in a more fluid and flexible way.

Adopting such an approach will undoubtedly pay dividends for all concerned. From a company perspective, pressure will be eased on managers and HR teams around traditional appraisal season. Furthermore, introducing a more timely, efficient feedback process will help staff to implement new methods far more quickly, aiding their development and increasing their productivity. From the employee's perspective, they enjoy a more constructive and near real-time feedback process which helps them to feel valued and accelerates their progression within their company.

Ultimately, it is a win-win situation. A happy, skilled and motivated employee is far more likely to do a better job, while they are also far less likely to jump ship at the first opportunity.