The annual review - an indispensable tool?

50% of managers call their company's performance management system 'mediocre' or 'unsatisfactory'.

This was one of the results from a survey carried out last year by the French 'Journal du Management', which asked its readers for their feedback on the evaluation systems in use within their organizations. 30 years of real-world practice and this is the best we can hope for?

MBO (Management By Objectives) has held a dominant position in management thinking and practice for the last 30 years, alongside its natural partner - the annual review. Today, we find the annual review to be held in pretty low esteem by both its practitioners and recipients.

How did we all arrive here?

1/ Getting the principles of an annual review accepted and agreed upon is often highly problematic

The annual review is the subject of discussions, meetings and, sometimes, fierce debate:

• Is it possible to expect an employee to achieve results if the objectives are not discussed or even negotiated with each individual?
• If negotiation is needed, how does it work? How are results to be measured against the objectives and what resources will be put in place to achieve them?
• What impacts will the review and its results have on the individual (an agreement of annual objective, future career path, compensation, etc.)?
• How should the evaluation part of the review be handled and documented?
• Who talks to whom? How are disputes handled? Does each manager handle direct reports or is a 360 degree evaluation more appropriate?
• How should the annual review be scheduled into the other organisation cycles such as financial periods?

2 / Productivity during the annual review process is an issue

When the principles have been set down as to how the process should be conducted, the day-to-day realities of making sure it happens appear all too quickly. These are the questions HR professionals most often ask:

• "We need 4 to 6 months to complete the annual review process!" How do we keep it managed and efficient?
• "The process is the same for everyone!" How do we cut across the organisation to deliver a working process to different groups of individuals?
• It all goes down on paper, it's impossible to use the outputs to programme activity! » How do we turn the talk into actions that help each individual benefit from the process?

Taken together, these challenges mean that today in many organisations consensus on the annual review is limited to a single fact: it needs to happen. This leads to depressing comments such as, "If it gets people talking, it's a good start!"

"50% of managers call their company's performance management system 'mediocre' or 'unsatisfactory'! So, do we need to reduce our expectations to make sure we have an efficient process? Absolutely not!"

So, do we need to reduce our expectations to make sure we have an efficient process? Absolutely not!

Have the original objectives of running an annual review really changed?

• Do we no longer need to focus on the link between individual performance and organisational objectives?
• Can any organisation afford the cost of running annual reviews (preparation, organisation, productivity losses) without getting anything tangible in return?
• When individuals are expected to have an entrepreneurial outlook within the organisation, will an annual review not de-motivate instead of motivate?

Each of these questions should elicit a negative response, the importance of the annual review cannot be underestimated and it remains a critical tool for organisational performance management.

Why performance reviews are now more important that ever?

As global competition intensifies and the service element increases in all industries, the achievement of objectives relies increasingly heavily on the ability and motivation of employees to reach them. Performance of the entire organisation is more than ever the result of the contribution of each employee, through:

• The quality of strategic execution at each layer of the organisation
• The ability of individuals to quickly adapt to rapidly changing and evolving market conditions
• The desire to innovate in the marketplace, in both the way the organisation works and to achieve customer satisfaction

These are the key drivers of competitive advantage today. Each of these elements requires individuals within the organisation to organise their activity around organisational developments.

The command and control organisation will not survive and prosper. So, organisational success depends highly on the level of understanding between employees and managers. The annual review is a critical tool in the process of ensuring a clear linkage between corporate objectives and the individual's targets and actions.

How do we reenergise the annual review and bring it back onto the critical path?

The first step is the realisation that nothing will change as long as there is not clear organisational agreement on the key points highlighted previously. There needs to be consensus that the annual review is an important and indispensable part of the organisation's strategy for performance management.

However, this is not sufficient to achieve success - there are still a set of practical challenges which face an organisation trying to reinvigorate the annual review.

How can the process be made efficient? How can the information that is recorded during the sessions be leveraged to provide value-adding outcomes for the organisation? How can technology be harnessed to enhance a human performance management process?

e-HR solutions can bring real value!

The challenges discussed above lie at the heart of many projects being implemented today by e-HR solution providers and organisations. Jobpartners is working with a growing number of organisations to provide solutions that are:

• Adaptable, in order to preserve the essentially human and inter-relational nature of performance reviews
• Flexible, so that each organisation gets what it needs according to its people strategy and can even customise down to individual populations within the enterprise
• Complete, so that the entirety of the information concerning an individual's personal development (such as aspirations, training needs, historical performance, competencies, career development scenarios, development plans, etc) can be consolidated and combined with more qualitative information such as the feedback from the annual review process
• Powerful , grouping separate data points together means that the organisation can turn this information into real intelligence to guide policy, strategy and initiatives for effective Human Resource Management

e-HR solutions can help bring the annual review back to life by making it easier to run the process as a strategic initiative and support management best-practice throughout the organisation.

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