Articles 4 min read

The Alternative to Annual Performance Appraisals by Kashmir Birk

Following my recent article about why performance management systems need to change, many people have messaged me asking how they can make the shift from batch-processing of annual employee appraisals to a continuous-flow of performance development.

To begin, let us undress what people are seeking to move away from.

If you Google “How to conduct a performance appraisal?” practically every response to this question is about what the manager needs to do to the employee.

The annual performance appraisal is all about creating the “the perfect event” – this is the big meeting where the ratings and feedback will be shared. It is devoted to planning, scheduling, preparing, conducting, reviewing, discussing, encouraging, agreeing, writing and directing a meeting. Not transforming performance.

Every article dutifully mentions that feedback and coaching need to be ongoing throughout the year and the annual event is just a summary of all the feedback provided through the year and that the meeting needs to be an open two-way exchange.

Few explain what the “through the year” means in terms of the specific skills, attitudes and tools the manager needs to apply and the kind of leader they need to be. It is all about fixing the employee.

The underlying assumption is that all a manager needs to do is follow a predefined set of procedures, in a big meeting once a year and the task of performance measurement is done.

We are lead to believe that when the manager uses the performance appraisal system properly, all will be well. But, this is simply not true.

The shift from a batch-processing of appraisals and ratings to a continuous-flow of performance development requires a complete shift in mindset.

It requires us to shift our attention from the person being rated, to rating the rater, namely to move away from the ‘carrot and stick’ rating systems used to control people and shift the attention to the qualities of the manager uses to engage people and their latent potential.

The hidden assumption in performance appraisals is that the manager always knows what is best. This assumption is based on the values of the patriarchal, top-down, feudal thinking that we have (unintentionally) inherited.

It is true that managers know different things than the teams they are leading, but they will never know everything or even always know what is best, otherwise what is the point of the teams?

Peak performance is achieved through an open, fearless, honest inside-out and outside-in collaboration, not fear-driven top-down supervision.

If we get rid of performance appraisals and ratings, what will fill the void?

The first priority is always to be absolutely clear about the purpose. The True North – namely the mission, vision, values, goals and objectives need to be clearly defined, openly shared and understood in a consistent way.

Once the True North is clearly defined and communicated, there are five conditions that drive success:

These are the five conditions that every manager needs to model and create every day:

  • Customer Driven Design – align every role with market or community demand. Organization design is not an event, it is an ongoing process of improvement.
  • Resilience and Tenacity – create a sense of urgency and excitement. Fully present in the moment. Honest. Grounded. Open minded. Not bound by custom.
  • Team Performance – the base-unit of performance is the team not the individual (i.e., measure the unique contribution individuals make to the teams they are part of).
  • Continuous Improvement – improvement and change are not batches of events on top of the work they are the way the work is done, as a part of the work every day.
  • Trust – champion inclusion, diversity, self-awareness, radical honesty and mutual feedback.

If a manager does not model and create these five conditions, it will not matter what the associates do, or what kinds of performance appraisal systems are in place, people will not be set up for success.

Conversely, if the manager establishes these five conditions, the performance appraisal system becomes completely redundant.

Here are the five conditions that best practice managers create, every working day in more detail:


  • Ensure all functions, roles and tasks are aligned with changing customer or community demand (current and future).
  • Optimize throughput, reduce cycle times and eliminate non-value added costs.
  • Remove resource constraints and invest in Return on Customer Value.


  • Surface latent problems, dig up root causes and drive issues to resolution.
  • Be an unrelenting results-driven champion of the customer and all key stakeholders.
  • Use visual metrics, agile meetings and huddles to stay on top of the work.


  • Select the right mix and depth of talent and renew teams as changes occur.
  • Ensure every member of a team is rallying to support each other.
  • Weave together each individual’s raw-potential and unique contribution in ways that enable the team to achieve results, that would be impossible to realize individually.


  • Apply astute situational and contextual judgement with objectivity and fairness.
  • Open to personal feedback, model the way their teams needs to learn and earn.
  • Break their teams out of redundant thinking so they can experiment and innovate. Open to new ways of seeing, playful and creative.


  • Champion inclusion and diversity as a strength not merely a compliance.
  • Model self-awareness, openness to feedback, candour and being challenged.
  • Listen, be humble, follow-through on all commitments on-time.

These five conditions require specific sets of skills, attitudes and tools.


There are four barriers that derail a performance-driven culture:

  1. Senior executives race so hard after outcomes and results to show the shareholders that they become blind to the conditions and systems that are creating the results. Without senior executive ownership of the performance management system, nothing will change.
  2. Managers are able to create these five conditions but they are not provided with the necessary tools, skills development or support. Sometimes managers create their own local performance systems and conceal these from senior management and HR for fear of repercussions. They use the annual performance systems as a bureaucratic form filling exercise to keep the company off their back.
  3. Managers who will not or cannot fulfil these conditions are not removed in a timely manner because the organization is soft on managerial performance, due to personal relationships, bias or conflict avoidance.
  4. HR leaders persist in maintaining HR systems that sit on top of the real, day to day work, as an interruption to work, rather than make people management a seamless part of the day-to-day management system.

These four barriers will keep the performance appraisal in place as the annual interruption.

In the meanwhile, the best managers will continue to lead by example and succeed in spite of the systems they have been provided.

These five conditions for success have been drawn from the best practices used by leaders to create a performance driven culture.

When these five sets of best practices become the baseline for all managers, and managers are provided with the necessary skills training and tools, the annual performance appraisal system and its ratings (labelling of people) becomes a thing of the past.

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