Annual appraisals used to be the beacon of employee engagement but many of the UK’s biggest companies have decided to do away with them.

Here are a few reasons why we’ve chosen to join them in saying goodbye to the traditional appraisal system.  

Why annual appraisals are past their sell by date  

When the appraisal system first became popular it was for all the right reasons. It provided employees with an opportunity to discuss their career path, touch base with otherwise remote managers and discuss issues.  

The concept of being able to condition an organisation’s people through a set of rewards and punishment no longer sits easily with modern ways of working. The appraisal process assumes that the employee who is being assessed is operating as an individual and not as a team. It sets standards that are inflexible and rarely reviewed. It fails to take into account that any failures may be a result of systems and procedures within an organisation. What’s more, many employers now see it simply as a box-ticking exercise and their employees are tired of waiting a whole year to have their voices heard.  

What’s the alternative?  

Conventional management processes are based on a belief that people cannot be trusted and need to be enticed by incentives if they are to do their best at work. Modern management, on the other hand, should be focused on delivering what the customer wants and improving the processes to deliver this. This approach leads to increased sales and profits.  

The challenge for businesses is how to monitor performance and identify problems without an appraisal system. Appraisals are often linked to pay reviews, personal development goals and internal communication strategies.  

Shifting the focus: By concentrating on improving systems and procedures rather than rewarding or punishing individuals, companies can make an important culture shift that takes them away from appraisal-based management.  

Reviewing pay and benefit systems: From an employee’s perspective at least, an appraisal is an opportunity to ask for a pay rise. By creating a pay structure that is linked to clear job roles and is reviewed regularly in line with market values, bosses can move away from the traditional appraisal review. Companies can also look at measures such as profit sharing but should be cautious about performance related pay, which harks back to the old appraisal era of carrot and stick.  

Improving communication: Businesses need to make time to listen to their employees and provide feedback when needed – and when appropriate. This process should be ongoing and this is only possible if a culture of communication exists. At Thornhvac, for example, weekly team meetings create a sounding board for ideas as well as an opportunity to address concerns. We have introduced procedures that improve the way we work and enhance communication throughout our business. Our employees know that whenever they talk to us their voices will be heard. We create a culture of trust and honesty which promotes a flexible and collaborative workplace where people want to give their best and feel motivated to achieve.  

Reducing reliance on KPIs: The recruitment industry generally puts a lot of emphasis on KPIs. How many CVs, how many applicants, how many phone calls. This plays directly into the type of reward and punishment culture already discussed. At Thornhvac we don’t focus too heavily on targets and KPIs. This frees up our employees to focus on service. Giving great service feels good and that in itself motivates people.  

Creating the right culture: Modern businesses survive on adaptability, enthusiasm and service and the best organisations are those that can create a culture that facilitates performance in these critical areas.