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What now for employee appraisals?

The job market has changed into an applicant market. This is leading to a rethink in the HR department’s assessment of employees and (also internal) applicants.

The job market has changed into an applicant market. Increasingly, companies have to approach candidates. And those who claim to be well-trained specialists and have management potential can choose which employer they sign with. This is leading to a rethink in the HR department’s assessment of employees and (also internal) applicants.

In times of great upheaval, ever-faster innovation cycles force every industry to question its existing models of success. Providers of modern tools and working methods have long since jumped on the bandwagon of the fastest possible patent solutions. In the meantime, New Work has replaced industry 4.0 and digitization as a trend. The lack of leadership talents has become one of the biggest challenges for companies. The need to identify junior managers, develop them into leadership roles and, above all, retain them within the company is a prerequisite for sustainable success in an ever faster-functioning world.

But what characteristics does the ideal employee need to have? How can these be measured or evaluated? How can potential new employees be enthused for a company? And what does it take to bind top performers to an organization? There is no patent recipe for these things.

Which employees are needed?

Notions of the ideal are often defined by competences. There are two perspectives here: the view of the company, the expectations of managers, peers or teams on the one hand and the perspective of employees on the other.

A survey of both interest groups mentions

  • Strong communication skills,
  • Team development,
  • Employee orientation,
  • Organizational talent and
  • Learning ability

in the same order as the most important core competencies. Leadership strength, on the other hand, is of secondary importance for both groups. Whether someone fits into the corporate culture – which is an essential success factor for the retention of a new employee – is often only revealed in the onboarding phase. This is one reason why agile companies and also many candidates prefer an interim solution first in order to mutually check whether a permanent commitment makes sense and is feasible. In times of limited skilled labor for growing companies, this type of recruitment is a new approach. If you work well together, an interim engagement leads to a permanent position. Conversely, the cooperation ends after a fixed period of employment – without separation discussions and negative energy.


„Agile management methods, such as Scrum, Design Thinking, Holocracy and virtual teams, demand significantly more self-responsibility and autonomous work on the part of employees.“

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Evaluation in a digitized world.

Up to now, employee evaluations in hierarchy-oriented corporate cultures have primarily been based on the assessment of the respective managers. However, agile management methods, such as Scrum, Design Thinking, Holocracy and virtual teams, demand significantly more self-responsibility and autonomous work on the part of employees. This environment is changing classic process structures and requires new evaluation standards. What counts is no longer just the relationship between manager and employee, but rather successful cooperation with team members at eye level – regardless of hierarchy and length of service. The classic annual appraisal interview with the manager is thus a thing of the past.

The fact that this model works has been proven time and again. Modern companies have abolished the traditional employee appraisal system. It has been replaced by rapid feedback loops between managers, peers and employees. The manager meets weekly with his or her employees for a personal dialogue. This is not primarily about achieving objectives, but about experiences in working together for mutual success and about issues that are important for the relationship between the two sides. The result is more intensive contact between the parties and, above all, the fundamental feeling of being seen and perceived.

One app for all employee communication devices enables insight into individual goals. Each team member knows the goals of the other. Fast feedback loops can be reported by direct feedback via the app. This in turn promotes direct perception and impact within the workforce and reduces the one-sided assessment of people in the circle of other colleagues. All this is an active and goal-oriented attempt to live modern leadership aspects and not just to present them as idealized rules on posters in meeting rooms.

What is the purpose of employee appraisals?

Some managers still try to explain to their employees why their salary perspective for the following year has been abandoned and refer to past performance in this respect. If the defined salary prospects and financial development perspectives do not correspond to expectations, the focus of a discussion is usually on the deficits in employee performance. This is how managers try to justify the decision. The positive aspects of cooperation, however, are completely relegated to the background.

This is precisely why some companies have long decoupled the appraisal interview from the salary rounds. Because the most important goal of such an interview should be mutual learning for better cooperation. The aim should be a dialogue at eye level in a respectful atmosphere – with clear forward-looking statements. Ideally, the dialogue should be complemented by 360° feedback with assessments from colleagues, team members, neighboring departments and external partners. It is advisable to conduct this overall evaluation and feedback through external feedback providers within a protected framework. It is enormously valuable for employees to experience how others perceive them.

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Old versus new economy

Modern companies take advantage of the challenges of digitization through agile working methods and create a distinct climate of innovation. A high degree of digitization of traditional evaluation methods (such as direct feedback and employee surveys) is used much more specifically for the future orientation of the company. While traditional organizations focus on short-term operational goals, more modern companies are much more concerned with strategic business goals. But how can more digital skills and the necessary culture for the employees of a company be brought into daily work? And what needs to be changed in the collaboration so that the company is fit for digital transformation and even more future-oriented? The answer is clear: management urgently needs the support of an entrepreneurial HR organization. This organization must change from its classic administrative responsibility into a digitization and cultural partner of corporate management. Otherwise, no ideas or thoughts of change will be capable of implementation.

In times of scarce talent resources, applicants can choose their employers. A shift in power between employer and employee is changing behaviors in the application process. A company must now show professionalism in attracting new talents. In this context, several important questions need to be asked and answered seriously. How is the application process structured, from the application to the feedback for the assessment of the interview? What do evaluation platforms like “kununu” say about the future employer? Do these impressions fit the mutual expectations of a positive collaboration?

The “cultural fit” between applicants and companies is therefore one of the biggest hurdles in personnel recruitment. In addition, established employees who have belonged to a company for many years expect from their managers just as professionally prepared appraisal interviews as newcomers. This is precisely what the benchmark needs to be for better cooperation in the future. A modern management culture also shapes the external impact of a company in evaluation platforms on the Internet. The corporate culture must therefore be lived out by the executives – and should be as transparent as possible.

A different kind of onboarding.

The aim of evaluations is always to compare an actual state with a defined target value. For an employee assessment, managers like to define goals according to the term “SMART” – in other words:

  • specific,
  • measurable,
  • achievable,
  • realistic and
  • time-related

Alongside rational metrics, the way in which objectives are achieved is equally important. Team goals through agile working methods are increasingly displacing the individual success of lone fighters. This requires a different attitude on the part of employees and managers.

In times of full employment and a highly competitive applicant market, the evaluation of companies by their employees is increasingly decisive for the attractiveness of an employer. Assessment interviews transform into feedback loops, independent of defined assessment rounds. Managers are only part of the process alongside team members, peers and other stakeholders. Innovative companies are simplifying these measures with apps in the cloud with access to all employees’ devices. As an essential part of a modern corporate culture, 360° feedback helps to recognize changes at an early stage in the digitized world. Platforms reflect the lived corporate culture for interested new employees and their fit from the applicant’s point of view. In this way, the evaluation of employees simultaneously becomes an evaluation at eye level with respect and esteem for the decisive interfaces of cooperation in a lived corporate culture.

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Harald Smolak, Director and HR Director at globalise company Atreus

Harald focuses on the fields of mindful leadership, coaching top management executives, conflict management, organisational and team development and enterprise transformations. In his work he advises and assists clients from the IT, telecommunication, services, electronics, medical technology and insurance industries. He has more than 25 years of experience in general management, marketing & sales, human resources and consulting. Before hiring on at Atreus, he held several executive positions in leading telecommunications companies, including Senior Vice President Sales Americas at Siemens AG and Head of Human Resources Marketing & Sales at Nokia.