Death of the Annual Appraisal in Oil and Gas?

A recent piece from EY’s highly respected Global Oil and Gas Sector calls for a new approach to performance management – one “that is focused on coaching and development, rather than ratings and rankings”. For any line manager or HR professional involved in appraisal in oil and gas, it’s a thought provoking piece.  Peter Smith, WBC’s Business Development Director has a few additional suggestions.

The EY paper quotes the expectations of Millennials as driving change in the annual appraisal process; but in my experience, few managers – even in the baby-boomer generation – were keen on the single, formal annual appraisal in oil and gas as the key element in career development discussions. In many other industries it has long been complemented, if not replaced, by other more frequent, informal methods of feedback. Certainly for me and many of my colleagues, the rule was always to give regular feedback, and ensure that nothing in the annual appraisal came as a surprise.

Another trend that EY highlights –also increasingly common in other industries – is to separate the appraisal from compensation. This is a tricky one: it’s pretty difficult to separate a performance related bonus from the performance appraisal. Perhaps it’s more important to separate the appraisal from career development and future compensation: successful career development sessions require open and frank discussions – not always easy if an individual thinks money is at stake if they admit weaknesses.

The other trend worth examining is the extension of the 360 – in which the employee gives feedback on his/her boss – into “reverse mentoring”, whereby junior staff provide coaching, support and feedback to senior management. Although this has been around for two decades, it’s gathered momentum under Millennial pressure and reinforces the collaborative dialogue they like.

How should companies ensure that feedback is given and collated regularly and consistently, in a way that enables HR to provide the right support and analysis?

Too much informality and you risk inconsistencies across the organization, making it hard for HR to have an accurate overview. But overstretched line managers are likely to resist frequent 360s and new sets of metrics. EY suggests the answer may lie in technology – with increasingly sophisticated apps that collect informal feedback, and by using text and sentiment analysis can allow for personal and cultural differences of style.

But the bigger issue is one of leadership, and I wonder if EY’s proposal risks substituting proper leadership – which should include regular, personal, feedback – with bureaucratic processes.

More metrics and more technology won’t turn a bad manager into a good one, and might allow management to think they are managing well when the reality is different. People will learn how to game the system.  These should be tools of support, not the drivers of management practice.

As EY points out, getting the buy-in of senior management is crucial. In an industry like oil and gas, the so-called “back-office” functions (HR, IT, Finance etc) often struggle to win credibility with the “Real Guys” in the front line – the exploration managers, the drilling engineers, the asset managers: introducing more corporate processes won’t make it easier. HR teams need to be ready to “sell” any new approach internally, looking at it from the perspective of the business unit rather than HR efficiency.

Our own 2017 survey of oil and gas professionals (to be published in March) has again highlighted the perceived lack of leadership skills in the industry and we will be returning to this theme several times in the coming months. For early access to our newsletters, complete the form on the right.

Further details on EY can be found here: ey.com/oilandgas/talent

If you would like to discuss moving on from appraisal in oil and gas, instead focusing on management and leadership coaching and development, please contact WBC at:  training@warrenbusinessconsulting.com

 

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