Is your appraisal system performing?

It’s time to call out the elephant in the room — most businesses only have appraisal systems in place to justify company bonus schemes. Let’s face it, that’s the reality for many organisations out there.

Its time to stop pretending that appraisal systems are actually effective and start focusing on what really matters in organisations — creating a culture that sets you apart from the competition.

As HR professionals, we are not taking the opportunity to fully shape what should in reality be the most crucial business activity system we have — ensuring our people know what they need to do and enabling them to achieve.

So, let’s cut to the chase — we need to be working with our organisations to develop a performance management system that drives organisational performance, shapes culture, engages people through task identity, identifies development needs, enforces the psychological contract, and encourages discretionary effort.

Sound too good to be true? Think again.

We need to start by rebranding appraisal processes with a more fitting name, such as Business Success Architecture or Business Enablement Architecture.

We need to reposition this critical activity in our companies as a positive one that integrates across many different activity systems and organisational architecture.

It’s time to ditch the outdated name that brings to mind painful memories of filling out forms after a combative and unproductive annual meeting.

Why do we need to do this? Because enabling both our people and our organisations is not done through an annual conversation that covers 52 weeks of performance, learning, reward, career aspirations, and general catch-ups. It has become a Frankenstein’s monster in the HR world that just no one wants to do and is not fit for purpose.

Let’s face it, feedback is not always a gift. When it’s linked directly to reward, it can lead to confrontation and awkward meetings. And don’t forget the biases — fundamental attribution bias, recency bias, overconfidence bias — they just make the conversation even more challenging. Trying to measure and quantify an imperfect system with a defensive employee and an untrained line manager only leads to an ineffective one-way conversation covering events over a year old.

It’s time for a change.

Let’s create a system that aligns our people with our strategy by engaging them with meaningful agreed objectives, supporting them in their delivery, and encouraging ongoing achievement.

It’s time to ditch the scientific management of Taylor and the past and embrace autonomy, mastery, and purpose. We need to create a system that brings these principles to life and engages our people in a way that speaks to them — knowledge workers of today and the new generations entering the workforce.

First port of call in creating Business Success Architecture will always be setting KPIs, OKRs, or Goals — whatever you want to call them. But this is just the beginning. We need to create a system that focuses on strengths-based coaching, regular check-ins, agile learning opportunities and ongoing feedback that leads to continuous improvement. Let’s ditch the annual review and embrace a more agile approach that fits our business tempo and encourages a performance-based culture.

It’s time to say goodbye to the old, ineffective appraisal system and embrace a new approach that drives organisational performance, shapes culture, engages people, and encourages continuous improvement.

So, are you ready to make the change?

The writer is the Group Chief Human Resources Officer of Galadari Brothers . He is a Chartered Fellow of the CIPD and a graduate of the Wharton CHRO programme. His work on organisational transformation has been showcased by the CIPD in their digital learning series and presented at the CIPD London Festival of Work. In 2023 he was listed in the top 50 most Influential HR leaders in the MENA by the Economic Times.

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