Two-thirds of large companies are changing their performance management systems, with 5% considering dropping performance ratings altogether, according to research from consultant PwC. Growing frustration from both managers and employees with the year-end performance process is prompting many organisations to focus on creating a continuous feedback culture to take the emphasis off the single, year-end appraisal.PwC interviewed 97 large organisations and 1,038 employees in organisations of over 1,000 employees or £100m annual turnover. The research was carried out in June 2015.
It found a renewed focus from organisations on their performance management process and how it can motivate employees and drive better engagement.However, the majority of employees, when surveyed, find their appraisals useful; although a sizeable 37% said they were a waste of time. Most employees consider their last performance rating to be fair or expected; however, many felt the quality of the conversation could be improved.
Alistair Woods, director in PwC’s reward team said:
‘Companies need to be careful not to throw the baby out with the bath water. Without the year-end rating, the danger is that the distribution of pay and bonuses can become even more of a dark art as shadow systems evolve without proper governance and infrastructure behind them.’