Performance appraisal, in earlier days, was only about performance coupled with compensation. But the performance appraisal system has evolved a lot in the past years, and it has become a part of a broader term, ‘Performance Management.’ Today, companies are looking for ways to track and manage employee performance throughout the year and also rate employees based on that. This approach helps the companies to steer clear of recency bias, spillover bias, halo effect, primacy effect, central tendency bias, etc. The features of the reinvented performance management system are its strength. The most common and effective characteristics are as follows.  

1. Goals management  
2. Continuous feedback  
3. Rewards and recognition  
4. Training and development  
5. 360 degree feedback  

An effective performance management system combined with the power of technology helps companies to grow leaps and bounds. Businesses were able to sustain and thrive in this pandemic only because of leveraging technology in all their processes. Adopting software to manage and track employee performance is also inevitable, given the present business environment and the challenges in the business space.   

Goals Management  

Powerful goal-setting frameworks like SMART (Specific, Measurable, Attainable, Relevant, and Time-Bound) goals and Objectives and Key Results (OKR) help businesses to focus on what’s important. Employees also learn what’s expected out of them and align their goals with the overall business objective. HR experts say that OKRs should be decoupled from compensation to make employees give quality and innovative work instead of focusing just on the deadlines to keep their ratings unaffected. Doing that also helps businesses aim for stretch goals and achieving them.  

However, though the goals will not be directly linked to the performance appraisal, the behavior and competencies that the employees exhibit during the process of achieving the goal will give more grounds for managers to rate the employees.  

Continuous Feedback  

Regular check-ins is one of the main factors that make the performance management system more efficient. Continuous feedback ensures that employees develop and grow along the way. It also lowers the chance of failure when a team takes up a large project or even small ones because the leaders will be guiding the employees throughout the process. The managers will also learn the concerns of the employees and help them in addressing the issues. The manager-employee relationship will also strengthen if continuous feedback is leveraged well. In this remote working period, here are a few ways to check on your employees,  

1. Frequent one-to-one calls  
2. A text a day to maintain constant communication  
3. Helping the employees open up about their problems by showing your readiness to help  
4. Addressing the common problem that the employees confront and making them trust you  
5. Biweekly team meetings to promote collaboration   

A study reveals that Managers who received feedback on their strengths showed 8.9% greater profitability and 24% of workers would consider leaving their jobs if they have managers that provide inadequate performance feedback. The retention rate of companies increases if they implement a regular feedback process. The productivity and employee morale will also increase as the employees see growth in the company they work for, which in turn, builds mutual trust and loyalty between the employer and the employee.   

Rewards and Recognition  

In this present-day business environment, rewards and recognition play an indispensable role in improving employee experience in an organization. Rewards and recognition became crucial since the experience economy started to take an upper hand. Employees want to know their contribution toward the company and seek instant gratification in the form of rewards and appreciation. The appreciation need not be only expensive gifts or monetary benefits but even a simple ‘thank you’ note will do. Some of the ideas to recognize the employees who put in a lot of effort and exceed your expectations are as follows.  

1. A thank-you note or email  
2. A free ride to the office (not in this new normal) 
3. Gift coupons or Amazon vouchers  
4. Learning opportunities like a course on Udemy  
5. Posting on a public wall within the organization  
6. Announcing in front of everyone and appreciating the employee  

These are little things that will have a great impact on the employees, and also a positive work culture is built that will attract great talents in the industry. When employees are happy and engaged, they work hard to make great achievements that bring pride to the company.  

Training and Development  

The skills of the employees need to be honed for the company to stay on the path to success, especially in this new normal. This pandemic, though it has a lot of downsides, it is a great opportunity for the employees to upskill or cross-skill. The travel time to the office has been spared and that time can be used to learn a new skill. The management can offer credits for learning something new or even tie it with compensation. This method not only encourages employees to upgrade themselves but also opens new roads for the company to explore.  

Hiring new talents for a role costs more than training the existing employee base. Therefore, the smarter way would be to use the workforce to their fullest potential rather than laying them off and hiring new employees with the needed skill set. The termination and hiring expenses are needed to be taken seriously as they affect the overall profits of the company. Also, a company that helps its employees to grow has a lower retention rate than companies that take no interest in their employees’ professional and personal development.  

360 Degree Feedback  

360 degree performance appraisal is a feedback framework where the peers, primary manager, cross-functional manager, other internal and external stakeholders provide comments on an employee’s performance. This method helps in identifying future leaders and nurturing them. In this remote working scenario or even if a hybrid working model comes into the picture, managers will frequently interact with the employees but there are higher chances of peers and others knowing the commitment level of an employee more than his/her manager. Therefore, 360 degree feedback ensures a fair appraisal process eliminating manager bias and other biases.   

The major components of 360 degree feedback are,   

1. Self-feedback   

2. Peer feedback   

3. Direct reports feedback   

4. Superior’s feedback