Annual appraisal ritual in most companies is a dreaded event for most employees. And there are good reasons why it causes a lot of stress for employees. Let us consider the facts.First and foremost, the traditional performance appraisals are a backward looking review process. It is akin to driving a car by looking in the rear-view mirror. A heavy weight system driven process that consumes considerable time & resources of the HR & managerial teams, A top-down cascading model of goals that may not be aligned with the employee’s rhythm of work. Rating and forced distributions on a bell curve determine merit pay raises. In many cases ratings are subjective and determined by the personal equations with the manager. Feedback mechanisms tend to focus more on weaknesses as opposed to development goals. Growing number of millennials in the workforce have a different set of expectations. They want a more collaborative environment that fosters teamwork and provides opportunities for learning and growth.

It is time for HR to revamp performance management practices to meet the needs of the 21st century workforce. As the war for talent intensifies, HR leadership will need to take the lead role to transform performance “management” into an agile performance development engagement. It needs to start by setting agile actionable goals that are aligned with the needs of the business. Goal setting can be done on a quarterly basis to ensure relevancy. A system of frequent check-ins that allow both the manager and the employee to review goals, provide feedback and recognition for achievements. Regular on-going conversations between the employee and his manager can foster employee engagement. Incorporating 360-degree feedback from subordinates, peers and managers can give a more holistic picture of employee performance and minimize personal biases. Feedback sessions need to focus on learning and development for employee career growth and retention.

Fundamental nature of work is changing. Is your HR organization ready to take the leadership role to re-imagine & revamp performance management to attract, engage & retain the best talent?