Question: We are considering eliminating our annual performance appraisal process and replacing it with a simpler method that focuses on more regular, ongoing feedback. What should we consider in managing this change?

Answer: Many companies are moving away from the cumbersome annual performance process to a more agile and focused method of managing company and individual performance. While there are different names for these tools, the most successful processes all share the same attributes:

  1. Leadership communication, coaching, and feedback.
  2. Focus on top corporate goals that are cascaded through the organization so that employees are clear on their goals and priorities and “where they fit” in the company.
  3. Employees and managers mutually set objectives (typically 4 – 6 objectives for the quarter) and key results to achieving the objective that are quantifiable and are graded at the end of the review period.
  4. Regular employee-manager reviews (typically weekly or biweekly) to focus on these objectives and discuss progress towards meeting them, as well as identification of issues for performance improvement and/or employee development and training.

In order to achieve the best success, train your managers so that they have the tools to set achievable “stretch” goals, provide feedback, and coach employees to develop their skills and be successful in their jobs. This regular mutual exchange of information and discussion of business priorities creates a culture of shared responsibility, enhances employee engagement, and boosts the achievement of overall business results. In addition, communicate the change to all employees by training them on the new process and tell them why you are adopting it and the results you expect. Emphasize that the company’s success depends upon everyone doing their part to meet the strategic objectives of the business and that they play a key role in this process.