Is it time to abolish appraisals?

Henry Stewart, founder and chief happiness officer of Happy, makes the case for ditching annual appraisals and take a different approach when it comes to giving feedback. 

Henry Stewart will be speaking at our conference in London on 21 November about making your workplace happy. See the full programme and secure your place here. 

I still remember a story told, 35 years ago, at a seminar on appraisals. They gave the example of somebody who was made redundant due to poor performance after ten years in the job. Apparently, the problem had been there throughout the period but nobody had ever told him. He thought he was doing fine.

That, we were told, is why you need an annual performance appraisal – so people get proper feedback and have a chance to improve. I was certainly convinced and went back to set up appraisals in the company I then worked for.

Nowadays I often ask people how often they receive feedback in their job and the most common answer is “once a year”, at their annual appraisal. And that is one of the problems with appraisals. Instead of giving feedback at the time, too many managers think ‘I’ve got their appraisal in two months, I’ll mention it then.’

At my company, Happy, we always thought we did the appraisals quite well. The form had been decided by our staff and there was a clear rule that nothing new should be raised. If there are performance issues, they should have been already discussed at the regular one-to-ones.

However when we took a vote on whether to keep an annual appraisal the verdict was 85% against. So we no longer do appraisals. Staff have regular (fortnightly or monthly) one-to-ones and, every four months, they have a check-in.

The check-in is based on a one-page form, which our people fill in themselves and has no connection to pay reviews or promotion. It is purely intended for the individual to review their own progress.

We are not unusual. Companies that have abolished the annual appraisal include Adobe, Accenture, and General Electric. But its not only commercial organisations. Last year Hackney Council decided to get rid of appraisals for all of their 4,500 staff. Instead, they have regular one-to-one and quarterly check-ins. All 750 managers were given training in being a coach to their staff. It is working well so far.

Research does not seem to back up the idea that performance appraisals actually lead to improved performance. Gallup found that only 14% of staff strongly agreed that performance reviews inspired them to improve. A meta-analysis for the American Psychological Association found that over one-third of performance interventions actually made performance worse.

As Sir Cary Cooper, visiting professor of organisational psychology and health at Lancaster University, puts it: “If you have socially and interpersonally skilled managers from shop floor to top floor they should give people positive and negative feedback every day, not once a year.”

Or as Gallup puts it: “If performance feedback only occurs a few times a year, it’s unlikely to be meaningful. In contrast, when formal progress reviews are accompanied by frequent, honest feedback — and the review is consistent with what you’ve heard all year — they can be affirming, motivating and, at the very least, much less awkward.”

But Gallup has one warning for those making the change. Make sure you provide training and support for managers, as you are asking them to play a different role and, in many companies, “managers don’t know how to talk to employees”.

Do your people, both the managers and the managed, look forward to the appraisals? Do they feel it is a good use of their time? And, crucially, does it lead to better performance? If you ask those questions and find that it doesn’t, then it is surely time to abolish them.

Photo by Helena Lopes on Unsplash