The Future of Performance Assessment: From Evaluation to

Dialogue

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Performance appraisal and assessment has been a critical part of the HR

practitioner’s process repertoire for decades. The annual or semiannual

performance appraisal cycle involving “evidence-gathering” and

evaluation of past performance has been an administrative nightmare for

HR and line managers, a necessary evil for top management and a feared

morale-destroyer for most employees.

The form and shape of performance appraisal has evolved through the

years, expanding its focus to take a more holistic view of “performance

management” whilst incorporating approaches such as Management by

Objectives, Balanced Scorecard, Total Quality Management and so on.

However, the fundamental philosophy of performance assessment has

remained the same – focusing on past performance against agreed

metrics. Many thought leaders in the HR fraternity have questioned the

value achieved by the traditional approach to performance appraisal,

describing it as a new form of “Taylorism” and as leading to negative or

counter-productive outcomes. Some organizations such as Adobe have

gone so far as to abandon the traditional approach to performance

appraisal and assessment.

A Critique of Traditional Approaches to Performance Appraisal or Assessment

The traditional approach to performance appraisal as a kind of “post

mortem” of the employee’s performance conducted by the line manager

has been critiqued by several HR thought leaders. A summary of some of

the key points of criticism is given below.

1. Despite the advent of performance “management,” most organizations still focus primarily on the appraisal step

The philosophy of performance management takes a holistic view by

looking at the multiple stages of Performance Planning, Performance

Feedback and Performance Assessment or Appraisal. However, in most

organizations, the vast majority of the time and effort investment in

performance management continues to remain in the appraisal or

assessment stage.

2. Performance feedback is often negative and one-sided, making employees focus more on “failures” and development areas rather than “strengths.”

Performance Feedback is often delivered to the employees in a rather

“paternalistic” manner where the assumption is that the line manager

knows more about the employee’s skills, abilities and performance than

the employee himself. Feedback usually focuses on “what was not done”

rather than on recognizing successes and carrying forward learning.

3. Performance assessment is seen as an event focusing on affixing “ratings” to employees and arbitrarily influencing compensation.

The performance assessment or appraisal stage is usually focused on

“labeling” employees through performance ratings, which in turn

influence compensation decisions. These ratings and consequent

compensation or reward decisions are often perceived as unfair, lacking

objectivity and transparency and prone to bias.

4. The positioning of the process increases employee defensiveness and limits honest dialogue.

The traditional performance management process is linked to rewards

and compensation decisions. Hence, performance feedback and

performance assessment discussions are often not constructive, open or

positive. Employees shy away from having an honest discussion on their

performance and enablers or disablers since they may fear that any sign

of weakness may be thrown back at them while performance ratings are

decided. Thus, most performance conversations tend to focus more on

“impression management” rather than being honest discussions on

current and future performance.

5. The process focuses on the individual at the expense of team and organizational enablers of performance.

As the very nature of jobs and organizational relationships change in

today’s world, performance assessment that is purely individual-centric

may become increasingly out of sync with organizational realities. Our

work systems today are increasingly collaborative in nature with myriad

interdependencies. Many system theorists also point out that the

“system” has far greater contribution to both individual and

organizational performance. This aspect is often not taken into account

in traditional individual-centric performance assessment processes.

6. The output of the process does not result in reliable talent decisions.

The impact of rater biases is often visible in performance ratings across

organizations that usually do not sufficiently differentiate amongst

employees or show skewed distributions. Thus, these biased or inaccurate

ratings may not provide a true picture of the health of an organization’s

talent pool. Since many organizations use performance ratings as the

foundation of critical decision-making in succession planning,

compensation management, development planning etc., the quality and

validity of these talent decisions is often impacted.

The Future: Moving From Performance Assessment to Performance Enhancement

Changing workforce expectations and recent research on motivation and

rewards theories challenge some of our fundamental assumptions about

performance management. In this light, several critical levers have been

proposed for performance management in the days to come.

1. Focusing on ongoing performance dialogue

The concept of annually set static goals may work well for certain jobs.

However, for the vast majority of knowledge sector and service based

jobs, goals are fluid and often unpredictable. Therefore, a key focus area

will entail setting ongoing expectations and near-time goals as situations

change. In order to operationalize this, the conversation between the line

manager and the employee will move away from being a one-way, annual

“download” of performance feedback to an ongoing year-round two-way

dialogue that happens through frequent formal and informal

conversations.

Therefore, a key imperative is to build an organizational culture that

share, accepts and encourages feedback on an ongoing basis. At the same

time, ongoing performance dialogue will focus not just on performance

but also on an employee’s all-round development and career aspirations.

Training line managers on coaching and development and on having

meaningful career conversations is, thus, likely to be a critical focus area

for HR practitioners.

2. Greater employee engagement in the process

Traditional top-down approaches to performance management are

unlikely to work in an increasingly “social” environment. Many

progressive organizations are engaging their teams and departments in

translating the organization’s goals into their own success criteria rather

than “cascading” preset goals to them. Organizations are also

experimenting with bottom-up approaches to performance planning,

sometimes using social media tools such as Rypple.

3. Taking a systems approach to performance management

The notion of “performance” often extends beyond the individual himself

and is greatly impacted by the organization’s culture, structure and

processes. Also, traditional performance approaches take an overtly

individualistic approach, overlooking the nature and value of team

interactions. Thus, organizations will increasingly benefit from focusing

on improving the “system” itself rather than solely focusing on individual

performance.

4. Delinking annual performance ratings from rewards

Performance ratings as the single most important driver of compensation

and rewards decisions often results in biases and skewed ratings. Many

management thinkers have proposed at least a partial decoupling of

annual performance ratings and rewards.

A system centered on ongoing performance dialogue will result in ongoing

performance assessment and feedback as well. This could serve as a

cumulative input into compensation and rewards decisions, thus

minimizing the impact of biases such as the recency effect. This also

eliminates performance and behavior “spikes” and “troughs” that may

occur due to the linkage of a singular, year-end performance rating to

reward decisions.

5. New technology and process modifications

The emergence of new technologies provides immense possibilities for

performance management. Electronic monitoring and ongoing reporting

of performance provides employees with real-time feedback and analytics

that they can act upon. Online employee-initiated multi-source feedback

systems may become an increasingly relevant feedback input in a

collaborative work environment. Social performance management

platforms are also being adopted by many progressive organizations,

which help in decentralizing and democratizing performance management

and embedding it into the DNA of the organization.

6. Shifting the lens from the past to the future

The future of performance management is likely to be less of

performance “assessment” or appraisal and much more of performance

“enhancement”. In this context, management thinkers such as Samuel

Culbert have proposed “performance previews” rather than performance

“reviews”. In these performance “previews,” the boss-subordinate team

will be evaluated as a unit thus creating a conducive environment for

ongoing constructive performance dialogue. The focus of performance

dialogue thus becomes “How can WE do better?” rather than the one-

sided “How can YOU do better?” that is so familiar to us. This helps

organizations play to employee’s strengths rather than their weaknesses

in work assignments and also helps keep the focus on enhancing future

performance rather than just evaluating past performance. Thus

“feedback” systems are likely to be replaced by “feed forward” systems.

Traditional top-down, once a year approaches to performance assessment

and appraisal may have no place in a world of unprecedented competitive

pressures, flatter structures, leaner staffing levels collaborative work

environments and empowered, decentralized teams. A system that is

focused on looking back at past performance and assigning performance

ratings in retrospect, will severely limit organizational agility as well as

impact employee motivation. Sustained organizational performance is

likely to be achieved in future through a holistic, year-round,

development-centric process that focuses on developing the capabilities

not just of individuals, but of wider teams and the organization itself.

-By Niranjana Harikumar

Niranjana Harikumar is an organizational development consultant

who has consulted with several organizations in the areas of talent

management, leadership development and employer brand

management.

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