Abolish the Annual Performance Appraisal and Move to an Agile System Continuous coaching and feedback are more effective than traditional, static performance appraisals. McLean & Company is a research and advisory firm providing practical solutions to human resources challenges via executable research, tools and advice that have a clear and measurable impact on your business. © 1997 - 2016 McLean & Company. McLean & Company is a division of Info-Tech Research Group SAMPLE Learn about becoming a member

EXECUTIVE SUMMARY Walk away from this blueprint with: Situation Traditional performance appraisals are not meeting the needs of today’s ever-changing world of work. Annual measurement of employee performance is static and demotivating to employees as feedback is not timely and relevant. Resolution Use McLean & Company’s Agile performance system to save managers an average of two hours of their time per employee, per year, saving thousands of dollars depending on the number of employees in the organization. Decide on the right Agile performance management system for your organization. Launch your Agile performance management system: Understand the Agile performance management framework and how to adapt it. Ready your organization for change: Prepare for change by communicating at key touch points. Plan your follow-up: Check on employees and managers to make changes to your system as needed, and update your stakeholders with results. Complication These problems have staggering effects on all employees within the organization, and lead to unnecessary costs for the business. Since the performance appraisal has been around for so long, it can be difficult for the HR department to provide an alternative solution to these issues. Walk away from this blueprint with: The understanding that a total overhaul to your performance management system is not always necessary. Tailor the level of agility of APM to suit the needs of your organization by using a full system or a hybrid system. Agile performance management is a system of ongoing, continuous feedback and goal setting that enhances the performance and development of employees on a constant and consistent basis.

GUIDED IMPLEMENTATION MCLEAN & COMPANY OFFERS VARIOUS LEVELS OF SUPPORT TO BEST SUIT YOUR NEEDS CONSULTING “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.” GUIDED IMPLEMENTATION “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.” DIY TOOLKIT “Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.” WORKSHOP “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.” Diagnostics and consistent frameworks used throughout all four options

Follow McLean & Company’s four-step process to implement APM Decide On the Right APM System Prepare to Launch Your APM System Ready Your Organization for Change Plan Your Follow-Up

SAMPLE SLIDES

The traditional performance appraisal has been causing problems for a long time We’ve known for at least 50 years that the traditional performance appraisal doesn’t work – yet we keep doing it. In 1965, the Harvard Business Review reported the results of a landmark study that tested the effectiveness of traditional performance appraisal systems at General Electric and found them to be ineffective (Source: “An Uneasy Look at Performance Appraisal”). Traditional performance appraisals are ineffective because: They are not adaptable for the world of work. The system was developed for a static, unchanging environment. This is not how the business world of today works. They are a poor driver of performance. Feedback given to an employee is “backward-looking.” Does not easily help employees understand how to change or improve performance on an ongoing basis. They are a huge demotivator. Biased ratings and lack of direction creates high levels of employee discontent which can lead to: Disengagement Turnover “ The management practices that served us in 1920, when we were in a manufacturing environment, a much simpler world, don’t work in today’s knowledge worker model. ” – Pat Reed, Agile Consultant

“ ” Introduce Agile performance management to address the problems Agile performance management can: Reduce management costs – the average time a manager spends on one agile review is six hours versus eight hours in the traditional method. Help employees manage changing priorities with frequent goal setting and clearly defined expectations. Allow the organization’s people to adapt more quickly to the changing needs of the business. Increase employee engagement. Increase productivity. Reduce voluntary turnover and increase involuntary turnover. Help managers and HR make better decisions for employees and the business by understanding their needs better. Function without the need for the dreaded yearly review. Definition: Agile performance management (APM) is a system of ongoing, continuous feedback and goal setting that enhances the performance and development of employees on a constant and consistent basis. “ The core of Agile is creating customer value, and understanding that as the world becomes more complex, it is absolutely critical that we become agile thinkers and naturally elevate people over process. ” – Pat Reed, Agile Consultant

HR respondents indicate that Agile performance management is a priority Organizations are turning to agile performance management techniques as a way to improve employee performance. By the end of 2015, 47% of HR respondents indicate their organizations will have Agile performance management implemented. Agile performance management was one of the trends surveyed as part of McLean & Company’s annual HR trends and priorities study. Although only 9% of organizations have already implemented agile performance management, a further 38% are currently in- progress or planning to implement it in 2015. Source: McLean & Company, 2015; N=298

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