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30th March 2020
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New research shines a light on what really works in performance management
Performance appraisals won't automatically lead to improvements, but it's equally misguided to say that they'll never work and should simply be abolished, says the Chartered Institute of Personnel & Development in a new report which refutes others' claims that appraisals are a relic of the past.
There have been plenty of leading stories in the press about corporate household names who're getting rid of their annual appraisals in favour of more informal processes. And with hard-hitting language such as 'axe', 'abolish' and 'kill' being used to describe this shift, these headlines are bolstering the widespread assumption that traditional methods don't work.
But the CIPD's latest research in performance management, points out that popular articles on new practices present little, if any evidence, on what is and isn't effective in improving performance. The CIPD's research sets out to address this gap by cutting through the rumours on current trends, and evaluating the available evidence to assess what actually works in performance management.
The report critically evaluates available academic studies and metastudies on performance appraisals and examines their findings and assumptions. It looks at two core components of performance management - goal setting and performance appraisals - and considers the dynamics of evaluation and the nature of feedback.
Rather like prescriptive medication, the CIPD's report finds that goal setting is powerful and does a certain job, but it can be easy to misapply or get the wrong dosage. Goal setting can clearly improve workplace performance, but applying it effectively isn't always clear-cut. Many jobs involve a mix of complex and straightforward tasks so objective setting needs to take this into account. Where work is relatively uncomplicated and predictable, outcome goals that are clear and specific can be effective in driving performance. But, many jobs involve complex tasks that require people to process unexpected information. In this less predictable work, unspecific 'do-your-best' outcome goals can be more effective than those that are clear and challenging.
Then there are behavioural and learning goals which, in complex jobs, can help people to focus on what it is that they need to do to perform, rather than on the end result itself.
In reality the lines are blurred between complex and simple jobs, with many roles combining both unpredictable and clearly defined tasks. What this means for goal setting is that it's crucial to think first about the nature of the job, and then to consider which type of goals are most suited to different tasks. Applying a one-size-fits all approach won't improve workplace performance.
However, goals on their own aren't enough - we also need some sort of feedback, or assessment to know what progress we're making with our goals. As such, some type of performance appraisal is crucial, but that doesn't mean it needs to be a formal, annual event as has been the convention until recently. This new report from the CIPD reveals that the medium of feedback doesn't make a difference - it can be just as powerful coming personally from a face-to-face discussion, or impersonally through automated dashboards and apps. The critical thing is that it is convincing information that allows employers to monitor progress towards their goals.
Based on evidence uncovered in the research, the CIPD is also recommending that employers 'appraise the appraisal' to understand employees' reactions to the process. Focusing on employees' perceived fairness of the appraisal is particularly important in determining whether performance will increase.
For instance, if an employee feels unfairly treated, unsupported, or demotivated after an appraisal, the performance management process is put at risk. But, if employers check in with employees following any performance conversation - whether it's a future-focused discussion on learning and development or a review to inform reward decisions - it's then clear if further action is needed.
When looking at the purpose of appraisals, the evidence uncovered in the CIPD's report clearly shows that using one performance appraisal for both developmental and administrative purposes is not going to work.
As far as is possible, developmental conversations should be kept separate from those looking at assessments and reward. These are psychologically disparate processes, and discussions about what employees have learned and how they can improve are mentally miles apart from those about accountability for past performance that assess how achievements might translate into salary increases.
The advice from the CIPD is for employers and HR departments to ensure that everyone involved is clear about the particular aims of the performance management tools that are in place.
Ultimately, this new report confirms that there's no easy answer to the perennial question of how to manage performance, but there are a number of practical things that HR can do to improve the current situation. As Jonny Gifford, report author and CIPD adviser for organisational behaviour says:
"It's worth spending the additional effort to get goal setting and performance appraisal right. Optimising goal setting can make the difference between focusing employees in a way that really contributes to performance, or acting as a serious distraction from it. In the case of feedback or appraisal, 'getting it right' makes the difference between a positive impact, no impact or a negative impact on performance."
6th January 2017