The COVID-19 pandemic has caused a seismic shift in the way we live and work, forcing businesses to reconsider even the most established business practices. One of the key aspects under reconsideration is regarding how best to manage employee performance and conduct performance appraisal.

 

As technology, digitization and flexible work schedules have changed the way work happens, many companies are also experimenting with their performance appraisal approach. If given serious, methodical thought, the pandemic can serve as a catalyst in adapting better performance appraisal processes. This will help to build better relationships, to have more frequent contact versus an annual appraisal, boost performance management and incorporate learning and team based objectives in the long run. 

Purpose Of Performance Appraisal

The core purpose of any performance management system is to enable individuals and teams  to perform at their best so that they can achieve individual and organisational success. The performance appraisal also provides a sort of guideline to create a shared understanding about what has to be achieved and what individuals need to do, learn and develop to be successful. Another important objective is to differentiate the performance levels of employees. This becomes the foundational component for calculation and distribution of compensation, promotions and development opportunities. This is one of the most critical functions of HR. However considering the fact that this year has gone by battling the woes caused by the pandemic, even the rules for performance appraisal, their criteria and the benefits need to be revisited for the current year and in the years post the pandemic.

Performance Appraisal -To Retain Or Scrap During Pandemic

Answering 3 simple questions, might be the key for any organisation to retain or scrap the performance appraisal process.

  • Does it have a well established appraisal process? (Conducted more than 2 cycles of appraisal process)
  • Is a large part of the workforce still working?
  • Should bonus be tied to performance reviews?

If the answer to the first 2 questions is yes, it means that business is on almost as usual and that the appraisal process can go through. Whereas if the answer was no to either of the first 2 questions, organisations might take on an abbreviated approach to performance appraisal.

 

Either way it may not be a good idea to completely abandon the performance appraisal process, since evaluations help to differentiate between the high performing, those who need to put in more effort and those who may not be in the right role at all. Thereby it becomes impossible to distinguish who requires training and in what capacity. Studies by the Boston Consulting Group have shown that it is very crucial to maintain the learning process during a crisis. Loss of continuity and ongoing feedback suffers considerably when the appraisal process is dropped. 

 

The appraisal process provides the framework for providing feedback and contributes to  the learning and growing process within an organisation, irrespective of a crisis or not. 

Impact Of COVID-19 On Performance Appraisal

The COVID-19 outbreak has had more than a significant impact on business operations and the financial markets. The pandemic which broke on the global map in the beginning of the year continues to be the top concern and game changer even at this point. This is that point of the year wherein many companies conduct mid year performance reviews, a kind of a mid year check-in point in the performance appraisal process. It is designed to assess against the annual goals and outline further expectations for the year. The year however, has been far from typical and these traditional methods will not serve the purpose. 

 

The current crisis has affected the goals and performance plans for everyone. These performance appraisals are now the only means for remote workers to understand how they are faring. Ofcourse an altered approach to the appraisal process is the need of the hour today. 

In light of this, 3 actions are seen as having most significance:

  • Linking Employee Goals To Business Priorities And Maintaining Flexibility

The current time is a constantly changing one due to the pandemic. Therefore it will make better sense to alter business goals as well as personal goals of the employee keeping this in mind. Flexibility in goal setting and the way work is handled will all go a long way in achieving success today.

  • Investing In Coaching Skills For Managers

This helps managers in maintaining the coaching and feedback process constantly in motion, which is most important in remote working set up. Skills such as creating a remote team culture, recognising and rewarding work, organising face to face communication, precise communication and so on will help greatly.

  • Good Performance Needs To Be Celebrated

In today’s changing scenario, it would help not only to celebrate the highest performers but  also any of those who are doing well consistently and at every instance.

Rewards And Recognition

Mercer’s 2019 Global Performance Management Study has shown that atleast 85% of the companies have been linking performance and pay decisions and 70% of the companies link the two by assigning performance ratings. 

 

Keeping employees ultimately boils down to rewards and recognition, no matter which industry. Being valued at work and being adequately compensated for it is the bottomline of worklife.  However, many employees have had to take a pay cut during the COVID-19 crisis in order for organisations to remain in business and for the workforce to be retained. A number of organisations are taking the wait and watch approach in order to assess the way things will move forward for business in response to the pandemic. Salary hikes are anticipated to be gradual this year with greater accent on incentives rather than fixed pay raises since they will represent the financial success of the company at various times during the year. 

 

Some organisations have also opted for a significant cut in compensation for higher management.  These paycuts, layoffs and trimming in various organisational activities is leading to a lot of anxiety amongst the workforce. In such situations, it becomes very important for business leaders to manage costs and pull through the year. The organisation should be clear in their decision making process and in communicating the same to the workforce. 

 

Many individuals are now working from home under pressing existing performance expectations, learning to cope in a new environment, working longer hours and many a time with blurred lines between the working and non working hours, stepping up to meet organisational expectations. Therefore, it is only sensible for organisations to recreate goals and KPIs to suit existing requirements, focus on contribution and not performance. A realignment of duties along with modified KPIs will be necessary to provide cross functional assistance. 

Performance Appraisal – Changes To Foresee

  • Employee Performance Is Unpredictable

Given the pandemic, it is impossible to plan 12 months in advance. Since the reality is changing on a daily basis, it is best to be flexible, have an agile approach and focus on short term goals.

  • Employee Performance Is No Longer Measurable

Now since targets have little meaning, it is difficult to measure performance too. 

  • Link Between Performance And Rewards No Longer Exists

Since there is an imbalance in targets, the point of linking rewards to performance will not hold good any longer.

Redefining performance and adjusting goals will form the basis of a redesigned performance appraisal process. A more flexible and open approach to performance management will go a long way in breaking the mental roadblocks that have arisen due to age old practices. Some of the changes to adapt will be:

  • Non Monetary Rewards And Recognition

Rewards and recognition reinforce great work and serve as a benchmark for the performance of other employees. Employees today are also feeling the financial crunch much like their employers. Therefore, it is necessary to explore non monetary rewards in order to boost employee morale. Training sessions for example could serve to drive home the message that the organisation is interested in the well being and progress of its employees.

  • Align Benefit Programmes To Current Employee Needs

The current needs of employees have changed drastically for employees in this pandemic driven world today. Their predominant needs today are centred around health benefits, increased medical cover, better residential wifi, access to global certification courses and so on.

  • Employee Wellness Is Core To Productivity

This is the time to show more empathy, be role models, more appreciative about targets achieved and emphasize on better work life balance. Employees will thrive in such encouraging environments leading to higher productivity.

 

Even if organisations decide that there has been too much disruption, to complete midyear evaluations, they should ensure that employees have regular conversations with their managers regarding the progress of their work. Therefore, performance appraisal in a formal or in a modified simpler manner will definitely help employees remain focused with increased productivity.