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Many companies now favour continuous feedback over annual appraisals
Management consultancy firm Accenture began its 2016 fiscal year by bidding farewell to the age-old system of annual performance evaluations of its staff. Many had anticipated that this move would be met with a certain amount of ire and indignation. Surprisingly though, it inspired very little, if not negligible, resistance. The euphoric acceptance of the change, resonated the scorn for the traditional system of annual evaluation

Note: This post was written originally for Forbes.com

Prior to Accenture, multinationals like Microsoft, Adobe and Gap bid adieu to this annual rite of passage of corporate life that both managers and employees love to hate. The reason for the shift from a formal appraisal system was that it cost the company a fortune in employee and management time and showed little evidence that it really works

The business benefit of getting rid of this system lies in simple math. For Deloitte, annual evaluations for 65,000 staff ate into two million work hours. Adobe reclaimed 80,000 work hours simply by dropping the annual appraisal system. Tim Taylor, director at Making Great Leaders, says, “I think it’s been known for a while that appraisals don’t work.” He goes on to elucidate: “Either managers are too lazy and everyone gets the same rating, or it creates false rankings by creating a bottom 10%—even if everyone is succeeding

The termination of the annual appraisal process at many organisations also comes from the fact that work cultures have inherently changed. As businesses and business processes have become more dynamic, an end-of-the-year appraisal is definitely a redundant process. With constantly evolving roles, changing team dynamics, shifting projects etc., evaluating performance based on goals set twelve months back is not only irrelevant but also unfair to a certain extent

Ultimately, the annual performance review ends up being an awkward conversation about salaries and increments and nothing constructive comes out of it

Today’s dynamic work environment demands a dynamic appraisal system. Having said so, one cannot undermine the importance of feedback. Yes, feedback is good. But what’s the point of a feedback that comes at the end of the year, and that too, as a surprise? The new system replacing the conventional appraisal system has to ensure that the feedback is continuous and backed by data-driven actionable insights. It is obvious that to a certain extent this would require continuous monitoring and assessment of the targets and goals of the employees in order to function well

Workforce analytics software can be immensely useful in scenarios that require a data-driven approach. With the help of analytics, managers can correctly measure the output of each employee and not in a draconian Big Brother way. This technology can assist both managers and employees identify performance loopholes and gaps and facilitate faster response times.

Workforce analytics can also be useful in assessing workloads and evaluate work practices on a continuous basis so that performance and productivity derailing practices can be immediately identified and weeded out. Analytics can also come in handy to identify training and development needs of individuals and teams and thus enables the workforce to become more efficient and productive.

Ultimately, the aim of organisations is to initiate a discussion between the manager and the employee on a more regular basis to make the employee a valuable and productive contributor to the team. Only when feedback is continuous and timely does it become constructive. With a proactive feedback system in place, change can be effected immediately

What the workforce clearly wants today is a feedback system that can constructively measure their performance and identify and show them the areas that need improvement and create an axis of people’s skills and work outputs. Since managers will have access to more direct reports than ever, avenues for continuous and meaningful dialogues around goals, expectations and development areas become easier and better received

Jim Collins in his book Good to Great says, “…a day-to-day culture of feedback and robust professional discussion is one hallmark of successful companies”. After all, delayed feedback, eventually, is just a waste of time