New HR study finds UK employers shifting away from annual performance reviews to ongoing dialogue

  • Top performing UK employers no longer rate employees, instead provide coaching and development opportunities
  • Continuous feedback replaces yearly event
  • Performance redefined as an employee’s impact on team and ability to collaborate

Forced performance rankings of employees are becoming a thing of the past. Instead, top performing UK employers are moving towards more transparent goal setting and more regular feedback as part of simpler and less formal performance reviewing. This is the conclusion of a new report on Performance Management by the Top Employers Institute. The study is based on a global HR Best Practices Survey among 600 companies in 96 countries.

96% of the UK companies that qualify for the Top Employers status are now consistently re-aligning performance goals during the year in response to changing business needs, and 84% evaluate the performance of their employees on a continuous basis, marking a major shift away from the traditional annual review, and towards providing ongoing feedback.

Traditional performance measurement seen as over-engineered

While employers consider it important to measure performance, current processes are seen to have become too complex and over-engineered, reliant on rating scales that are perceived as not fit anymore to measure performance in today’s working environment. The survey shows a trend for employers to offer coaching and development opportunities, rather than rankings.

A key finding of our study is that Performance Management evolves from an annual event with rigid objectives to a transparent process of continuous dialogue, with flexible goals, that is more embedded in day-to-day operations so it can better deal with change. Companies that become Top Employers redefine performance as the ability to collaborate and contribute to the success of a team”, states David Plink, CEO of the Top Employers Institute. “We are definitely on the verge of a paradigm shift in the way we look at Performance Management.”

Previously the focus for Performance Management had been on the individual and individual tasks. But as many companies foster a more connected and team-based working culture, traditional performance measures do not reflect that anymore. Key capabilities are now social awareness, agility and flexibility so that top performing companies aim to assess the effectiveness of employees in the broader work environment.

As a consequence Top Employers are increasingly encouraging their teams to be more involved in their own Performance Management so they can feel in control of their own progression. Those companies have realised that an inclusive approach helps support a high performance culture which helps accelerate the company’s strategy.

Finally, the survey highlights a weakening link between Performance Management and compensation, with only just over 10% of participants considering an important objective of the process being to provide a basis for salary increases. This shows how the overall objectives of Performance Management are changing. A rigid link between performance and pay enforces a strong emphasis on individual performance, but is not effective when looking at an employee’s contribution to the performance of the organization or the development of other employees.

Petaurum Solutions’ Comment

Measuring performance is a business-critical activity to ensure employees are meeting the ever-changing requirements of their business.  Rigid processes that are over-engineered, too complex or happen only once a year are never likely to be agile enough to cope with the demands of modern day business and it is unsurprising that this study reveals a shift towards a continuous assessment process.  The best advice we can offer is “keep it simple” if you really want to embed performance management into the daily activities of your managers want to know more then why not contact us we would love to talk to you

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