Updated: Jul 5, 2022
Traditional performance appraisal processes have, at least, two main issues: applicability and the process itself. Lacking better solutions, companies stick to bureaucratic, complex processes. Many will even perform appraisals that aren't used in an actionable way, which won't resonate with other organizational practices.
The first issue is that performance appraisals provide a path for employee development, but won't provide actionable numbers for compensation. That means management will still have to moderate, interpret or “calibrate” appraisal results (in the case of 360 degree reviews) and decide who gets a raise or promotion. Even harder - and less fair - would be to carry that process in a forced ranking organization, such as the 70/20/10 system. Who knows whether only 10% of employees are performing above the average and deserve a raise? How would an employee feel when a colleague is promoted while they're not, only because the "curve has saturated"? What kind of image does your company give off in a situation like that?
The second issue has to do with the calibration process. Performance appraisal processes take a long time. In addition to that, management still needs to calibrate results. That's an important step to align different forms of measurement among different managers, reducing bias and making appraisals fairer. There are, however, other two negative implications, the first being the amount of time that process takes. We know company managers who have spent more than 20 hours to calibrate appraisals. Why spend 20 hours when it's possible to save time and improve process quality?
I'll soon be telling you how, but first let's understand the second implication, which is simply absurd: managers who barely know the work of their subordinates will be discussing their performance. How can this be considered fair? Wouldn't it be way fairer to take peer opinion into consideration? Appraisals carried exclusively by management are a problem. As Jurgen Appelo states, only the whole system knows all the details. Appraisals conducted by management alone (with or without HR assistance) are incomplete, partial, and often biased.
The best way to determine each employee's performance and contribution is to let peers appraise them. Calibration must be conducted upon these appraisals, so that the result is a balanced opinion, and not a person's isolated thoughts. That way, the level of acquaintance among colleagues can be considered and respected.
Calculating and computing all that would take too long, not to mention only a few specialists would be able to do it. But that won't be a problem, because Percival allows for peer appraisal and delivers finished results in a short amount of time, so as to optimize the process. It also provides leaders with solid input, allowing for actionable compensation decisions. Above all else, it'll improve the perception of fairness toward the appraisals. Book a chat with us, and we'll be glad to show you how Percival can make your leadership become more effective.