How often one should be appraised?

How often should a company appraise its employees? For most organisations, the apparent answer is annually. But, reviewing performance and attainment of goals once a year perhaps isn’t enough under most circumstances. Businesses are running in a fast-paced and dynamic environment, where processes have to be tweaked and reorganised on a fairly regular basis. Hence, frequent feedbacks are required. It also depends on the capabilities of the organisation's system to handle huge employee count and complete appraisals more frequently and effectively.

The role of the manager is to monitor employee’s performance and behaviour periodically and address it as required, as well as praise them whenever appropriate. Unfortunately, that rarely happens and timely recognitions are not given. This leads employees to develop their own perceptions about the ineffectiveness of the process. Some of these could be along the following lines:

1. Traditional appraisal process, not in-line with current industry requirements
    
2. Ineffective business reviews
    
3. Rating system that fails to support individual development
    
4. Loss of credibility and buy-in from stakeholders
    
5. Long drawn and outdated processes

For many employees, the appraisal is mostly about a year-end emphasis on meeting goals in time for the reviews and the eagerly awaited payouts. Appraisal sessions are a review of all the previous discussions and should ensure that discussed corrections have been made. They are an opportunity to plot what needs to be done in the coming year and what goals are to be set. Linking it to the compensation depends on the budget, flexibility of the system and the culture of the organisation.

Many managers let employees go, waiting for the official performance evaluation. Managers who have been mentored, trained or see value creation in such processes, will handle these situations well and in a planned manner. They realise that success of a job is proportional to behaviour and performance you require, which has to be reinforced through frequent feedbacks.

Baby boomers prefer less frequent feedback. Millennials prefer more. Younger workers feel blindsided by feedback that they receive. Experienced workers know the job and somehow see no value in feedback. It’s important that employees understand that while a more formal performance discussion may only happen once or twice a year, it’s undeniably imperative that there will be ongoing feedback about your job tasks and responsibilities all year long.

Performance reviews don’t have to be “all or nothing”. Find a middle ground by identifying the parts that are working for your company, and drop the ones that aren’t. Organisations should view performance incentives in a broader look. One of the major drawbacks about traditional performance reviews is that they’ve often been used as the deciding factor in the raises or other performance incentives employees may receive at the end of the year. Reasonably, that leads to significant concern for employees, it develops a stress which can be given-away if broader performance incentives are put into place. There’s growing evidence that also suggests increased recognition - whether or not it translates directly to increased compensation or improves employee satisfaction and performance. Give feedback and recognition in the moment. Compensation should not be thought just in terms of annual raises but as rewards are given periodically that recognize good performance. You’ll be able to remove the stigma associated with traditional performance review processes, while still giving your employees the feedback they need to be successful with your company.

Current standards of performance appraisal must take this reality into consideration, whether by offering more frequent feedbacks, helping employees decode this feedback into meaningful and achievable professional development paths, decentralizing performance-based incentives or taking thoughtful steps needed to engage employees in the performance management process. The future of your workforce depends on how your employees thrive.

The author is director and head – Motilal Oswal Financial Services Ltd