White Paper on switching of Performance Appraisal Cycle

Anniversary System of PA and its rationale:

 Anniversary cycle of appraisal i.e. – appraisal is carried out annually based on date of joining.

• This system has its advantages like
  • Incremental cost getting spread across the year – helpful in cash flow management for SMB units.
  • Reduces impact of appraisal on the organization
  • Gives higher flexibility to respond to business needs.
• As the organization grows big (typically 250+ resources) this system starts showing concerns such as
  • Leads to unpredictable HR budget
  • On an average, 25 to 30 appraisals in a month – this keeps the concern Managers and HR team busy every month
  • Difficulty for PLs to set up KRAs of the team  members which are comparable over a define time frame as everyone from the team will have different appraisal cycle
  • Relative chain of dissatisfaction starts with extreme (positive) cases of appraisal
  • Manager focus from the core job gets diverted every month as he has to spend considerable time and energy in appraisal of his team mates.
  • Increase in uncertainty over retention of resources as appraisal of team member in the respective month will have bearing on his inclination to play a longer inning.

 Anniversary PA cycle and its rationale

 Appraisal process is conducted during the specified time frame during the year

• This system helps us in addressing concerns of the Anniversary system and additionally it helps in:
  • Managing expectations
  • Streamlining HR budget
  • Increased focus on the process
  • Increases HR team bandwidth

 Challenges in switchover process – resistance to change!!!

ü      Resistance to change from Management & resource perspective

ü      Considerations are different in both the perspectives – HR needs to play a balancing role

ü      Requires strong conviction and process understanding of HR team and its leadership

ü      Requires concept selling at all levels in the organization i.e. Resource – Manager – Senior Management – Finance Team

 Implementation Strategy  

• The entire exercise should be timed properly and requires meticulous planning
• It’s not advisable to switch directly from Anniversary to annual appraisal system wherein PA is conducted only once in a year
• It is advisable to follow Bi-annual PA system i.e. Appraisals will be conducted twice in a year – April & October of each year – However, it will be once in a year for a resource.
• Appraisal cycle will be triggered in the month of April for all the resources eligible for appraisal in the months of Jan to June
• Appraisal cycle will be triggered in the month of Oct. for all the resources eligible for appraisal in the months of July to Dec.
• For streamlining the cycle, we shall give onetime retrospective appraisal effect for resources eligible in the months of Jan, Feb, Mar., July, Aug, Sept. They will follow a fixed cycle from the subsequent appraisal cycle.
• Employees on probation and due for confirmation shall also be included in the same cycle. However, probation confirmation will not be pre-poned for aligning the resource in the appraisal cycle. It will be ensured that increment at the time of probation confirmation happens for those resources who have been committed this at the time of joining.

 Strategy angle to this process

•  Resistance will be minimum if we make switch over in this pattern
• If we do not do this, we will not be able to change this in future as well
• Will also help in managing incremental salary cost for the year – good strategy for an SMB unit till it migrates to next level of financial stability    

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Tags: Performance Appraisal Cycle, Performance Appraisal Cycle frequency