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.  Continue reading