Is The Appraisal System Dead?

If, as is reported, as many as one third of U.S. companies have abandoned the traditional appraisal system (ref:The Performance Management Revolution), and the signs are that more and more are joining the revolution, what is the future of performance management? How will companies ensure that people do what is expected of them in the future? How will managers know who’s good and who’s not? How will they advise on development, or decide who to sack and replace?

Major players such as Dell, Microsoft and IBM, as well as previous champions of the
forced ranking system such as GE, are at the vanguard of new approaches to retaining and developing talent.  These companies are responding to many issues and criticisms which have been levelled at traditional performance management systems. In some organisations they have become enormous consumers of people’s time. With  the move to
flatter organisational structures and virtual or globally dispersed teams, supervisors have had to contend with larger and larger teams. The answer to this problem in some companies has been to turn the job of performance management over to ‘specialist’ people creativitymanagers, who do little else other than manage the entire cycle, quarter after quarter. Ranking, levelling, forced distributions, identifying rising stars, identifying laggards, assessing delivery against stretch targets, calculating the distribution of the bonus pot, and starting the whole cycle again.  This has become an industry in its own right, and one that delivers no core benefit to the customer or the shareholder.

A number of factors have played a part in driving the shift we are now seeing. 

  • Younger talented people prefer to have more regular, but less formal, check-ins, with a ‘coach’, and at a time when the feedback is most useful.   As the economic recovery gathers pace, and workers feel more confident about looking elsewhere for alternative opportunities, employers are becoming more keen to retain good people and provide them with development to harness and nurture their talent.
  • Companies are placing greater emphasis on the success of the team rather than the individual.   This is especially true in global organisations that are making use of collaborative IT capabilities. The traditional team structure of the past is giving way to virtual and transient teams, coming together to plan, design and deliver, perhaps never meeting in the flesh, and then moving on to new assignments and new teams. Traditional forced ranking systems tend to focus on the individual and inevitably create inter-team competition and tensions, not conditions conducive to collaborative working.
  • Agile calls for different mindsets and recognises different qualities.   With a relentless demand for competitive advantage comes a need for a different way of doing things. The traditional project delivery cycle is being consigned to the dustbin in many industries, and being replaced by Agile practices. No longer is “strict adherence to the project plan and customer requirement” a virtue. In the world of Agile, qualities of flexibility, creativity and recognising value in incremental business delivery, are of higher value than traditional project skills.

Traditional performance management appraisal systems tend to drive toward conformity. It moulds people (the ones that choose to stay that is!) into the image of what the company believes it needs, according to an established and well-used competence framework. In other words;

Traditional System = Traditional Workers = Traditional Results

So, what’s the alternative?

Well, it should be no surprise that it is all about “conversations”.  Conversations in the
moment, at the right level, about the right things, and in the right way. Upwards, downwards and sideways. Conversations that are focused on challenges, problem solving and learning. Not conversations that are stored up until a predetermined one-to-
one session when the opportunity for learning has passed, nor conversations that play out
in the heads of the individuals and never actually become aired (these are often the most
dangerous of all).
 These conversations will encourage creativity. They will promote shimer_college_conversation_with_students_2010-1024x683difference, diversity and even dangerous thinking. After all, if companies are to gain the competitive advantage they seek, they need “Game Changers”.  Game changers will not thrive within traditional appraisal systems that rein in their enthusiasm and do not reward disruptive thinking.


Supervisors and managers who coach for creativity and who encourage imagination will be essential in the post-appraisal world.   Which begs some big questions.

How well equipped are our supervisors and managers to conduct these conversations? How ‘coach-like’ are they in their style? How easily will they be able to switch from being a ‘past-focused’ assessing manager, to a ‘forward-thinking’ possibilities coach?  

Identification of people capable of doing this well is essential, and those businesses that take development of coaching and conversation skills seriously stand the greatest chance of making a successful transformation to the high performance culture of the future.


Coaching is a powerful and proven approach for helping you and others release inner creativity. Would you, or members of your organisation, benefit from exploring ways to make significant improvements in personal and/or collective effectiveness and productivity?  

To learn more about how you or your teams can build skill in this area, and create a working environment built on constructive, creative conversations, please do get in touch.

Simply drop me your contact details on the Contact Us page and I will be delighted to speak with you. 






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