Thursday, July 23, 2015

Annual Performance Appraisal - my approach

Here are two articles about two large multi-national companies that implemented a new way of carrying out their annual performance appraisal.

This article reports that Accenture is changing its traditional approach as it takes too much time to train the managers and supervisors on the system and to carry out the exercise each year. Furthermore, the outcome has been unsatisfactory.

This article reports that Deloitte is now asking only four simple questions in their performance appraisal.

When I was running a large insurance company, I also found the traditional approach to be time consuming and counter productive.

I adopted a simplified performance appraisal system involving a few simple questions. The approach is similar to what was done by Deloitte.

I did not rank all the employees according to the performance scale, as it was too controversial and those who ranked poorly felt demoralized. They also felt that the performance appraisal system was flawed.

Instead, I used the results to identify the top 25% to be considered for a performance bonus. It was used as a motivating factor, without the harmful effort of being demoralizing. It provided an incentive for employees to perform well. Even so, the people picked to be the top 25% tend to be the same group of people over the years. The other employees also felt that the appraisal was unfair and that the managers tend to give higher scores to their favorites.

On balance, we still need a simple performance system. It may not be a perfect system, but it probably provided more good than harm, if it was adopted correctly.

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