More and more organizations are changing their traditional HR cycle to a more modern interview cycle. And rightly so, because conducting an appraisal interview, which is part of traditional performance management, has been done since the year 1920. We have hardly adjusted anything on it since then, either. So does our “outdated” HR cycle still match modern business practices?
In this blog, we answer that question and explain the differences of the traditional and modern HR cycle, what market developments affect an organization’s interview cycle, how to revamp the HR cycle itself and what methods are being used today. Finally, we give real-life examples and share how we apply the modern HR cycle ourselves in our company.
What is a traditional HR cycle?
When we talk about an HR cycle, we are talking about the collection of all formal and informal moments of conversation between manager and employee about his or her goals, development and career. In contrast, the traditional HR cycle is one way to measure (business) performance. In recent years, a number of conversations and topics have been added to the traditional HR cycle, for example: sustainable employability. Every HR cycle begins as early as the job interview, but the angle of follow-up differs. The traditional HR cycle is followed up, after the job interview:
- Planning conversation: translating goals of the organization to divisions, departments, teams and then to the employee – beginning of the year;
- Performance review: discuss progress and degree of achievement of stated objectives – mid-year;
- Appraisal interview: review performance (results) and see to what extent objectives have been achieved. Often a reward is also discussed with the employee – end of the year;
The three conversations mentioned above are part of the traditional three-stage model, of which the appraisal conversation was already brought into life in the year 1920 by Walter D. Scott. Some organizations still work additionally with:
- (Career Conversation – PDP): discuss personal development and career of the employee, focusing on the future – once a year.
The setup of the traditional HR cycle will probably sound familiar. There are many dissenting voices showing that this HR cycle no longer delivers what it should. Earlier in our blog we talked about Abolish performance appraisal? Bad idea! already detailed the shortcomings of this traditional interview cycle. We list the numbers again:
- Nine in 10 HR managers report that their performance review does not include qualitative information (CEB, 2015);
- 95% of managers report dissatisfaction with the annual HR cycle (CEB, 2015);
- A manager with a team of eight employees spends an average of 210 hours per year on the traditional interview cycle (CEB, 2015);
- 66% of employees report that their productivity is reduced by an annual interview cycle (CEB, 2015).
95% of managers report dissatisfaction with annual HR cycle
Key reasons to revamp the HR cycle
The numbers, which indicate that the traditional HR cycle is no longer conducive to both manager and employee, are startling. The need for change is high and market trends also clearly show that the traditional HR cycle is out of date. How do we respond to that? Let’s look at what factors are currently having a big impact on organizations today:
1. Companies must innovate quickly to survive
By 2033, companies will only exist for an average of 5 years . At least, if the trend shown by Sogeti’s research continues. The study found that the lifespan of businesses declines by 25% every 10 years since 1993. Why is it that organizations have such a short lifespan? This is due, according to Sogeti, to the increased speed of innovation. Especially in the digital industry, this plays a big role. Consider, for example, Whatsapp, which is the
telecommunications market upside down kette or the impact of 3D printing. The (traditional) HR cycle is usually not yet adapted to this, which often allows problems to accumulate.
Companies must continue to innovate and respond to changing market conditions faster than ever. In the traditional HR cycle, goals are usually discussed with the employee once a year. But if the organizational goals within a rapidly innovating company are changing frequently and rapidly, it may be wise to discuss the employee’s goals on a regular basis as well. A renewed HR cycle can help by continuing to discuss developments through an ongoing dialogue.
2. New technologies and “The Future of Work.
The world of technology is growing, but the way we work has already changed. These days, they also call it the “Future of Work. This term represents the changes on which work will be done in the next decade, influenced by technological, generational and social shifts. Similarly, on the list of most important topics for HR professionals in the Netherlands, the topic “digital support of HR processes” has moved from seventh to fourth place. Many organizations are already looking for a solution to revamp the HR cycle, and we recommend looking for a technical solution. For example, the HR cycle can be supported by an HR software.
With increasing technologies, not only are new positions emerging, but there is also a shortage of digital skills among employees with existing jobs. Skill gaps are only expected to widen. WEF research (2020) shows that 85% of companies expect to be short of digital skills within 5 years. In addition, accounting firm PWC has studied that between 21% and 35% of all jobs in the Netherlands will be partially or fully automated. And of all the jobs that will exist worldwide in 2030, 85% have not yet been invented (SHRM and Willis Towers Watson, 2020). It is important to be aware of this and realize that employees need to learn new skills in the future.
We recommend that the manager have an ongoing conversation with the employee; to discuss the skill gap, the current position and the employee’s career prospects within the organization. Properly deploying a modern HR cycle creates space and support for the employee development process.
3. Millennial and Gen-Z generations
We speak to many HR managers who have not yet considered the fact that by 2030, half of the workforce will be Millennials and Gen-Z’ers. These young generations have very different expectations when it comes to their careers and the role of their employers (than previous generations). In addition, they are extremely important to an organization because of their digital skills and innovativeness. And yet they seem to have a hard time bonding. Especially in today’s job market where jobs are plentiful, as an international study by Deloitte Global (2022) indicates: four in 10 Gen-Z’ers will change jobs within two years if the offer is better somewhere else. But what also stands out is that “learning and development” are within the top 3 priorities of the Millennial and Gen-Z generations.
Millennials and Gen-Z’ers, when it comes to an HR cycle, have a clear preference for continuous dialogue with their manager, frequent development meetings, room for development and a clear career perspective. In fact, eight out of 10 Gen-Z employees would prefer to have a coach or mentor from day one, according to Intelligence Group research from 2022. So providing the young generation with growth opportunities within the organization is essential. From this we can say that an HR cycle is needed that supports and motivates this generation in their careers.
What are the trends in the market?
There are organizations that supplement their traditional HR cycle with an informal one-on-one interview. In doing so, they maintain the traditional three-stage model (planning, performance and appraisal) where the focus is on performance. Despite having informal one-on-one meetings alongside it, employees’ personal goals are still often forgotten. Career prospects are not discussed or they are at odds with the rapidly changing organization. The lack of attention to the employee’s digital skills and developments has not yet been discussed.
So should we do away with the HR cycle? There are organizations that previously fell into this trap. The responsibility then shifted entirely to the manager and the employee. In 2018, Gartner did a study on removing performance ratings, but what did it find? The reduction in calls actually resulted in lower engagement.
“Servant-leaders take a step back, letting go of their employees without leaving them to their own devices. Employees continue to need regular guidance and support from their supervisor in the role of coach and evaluator.”
It is best to take a close look at the HR cycle and revamp it. HR departments can grow their organizations tremendously. “Many organizations decided to frame conversations differently. There are now perhaps more conversations with employees than in the past,” writes Jacco van den Berg in his book “The Performance Menu” (2021). Over the past few years, several modern ways of thinking for this have been developed to help companies revamp their outdated HR cycle. These are the most well-known methodologies used to support/reinforce the HR cycle:
The New Assessment
One methodology for organizations to look at assessing employee performance in a new way is The New Assessment. This is a way and a train of thought to approach an HR cycle. Business economist Jacco van den Berg is one of the founders of this theory and he wrote a book of the same name about it. In this book, Van den Berg indicates that he is not “against” appraisal, but he feels that the way it is done, within the traditional HR cycle, could use a refresh. Van den Berg writes, “Servant leaders take a step back, letting go of their employees without leaving them to their own devices. Employees continue to need regular guidance and support from their supervisor in the role of coach and evaluator.” (The New Assessment, 2017)
- Focus on employee talents;
- Make employees accountable for their development agreements and performance goals;
- Have an ongoing dialogue about performance and development;
- Employee is responsible for monitoring appointments;
- Servant leadership: managers determine the what, employees determine the how.
The Good Talk
This merges the traditional planning, performance, and assessment interview into one conversation, but several times a year. We can already call this an HR cycle strategy that has evolved. One regularly reflects on the employee’s achievements and developments in the past period. Both successes and areas for improvement are discussed, as well as looking ahead. Questions that arise in this HR cycle:
- What contribution can the employee make to team and organizational goals in the coming period?
- What would the employee still like to develop?
- What can the employee do to move one step closer to his or her career goal?
A Continuous Dialogue
The “Good Conversations” are followed up in this HR cycle in the interim with ongoing one-on-one conversations. In it, the progress, success and blockages of the set goals and development objectives are discussed between manager and employee. The goal of the Continuous Dialogue in this HR cycle: to create productive and engaged teams that can do their best work, thus growing your organization.
The 3 most important tips for a modern HR cycle
We share key tips that we use ourselves at Learned and which we also recommend to other organizations. To enable employees to make their best contribution, we use the New Assessment method for our HR cycle. We deploy interviews tactically so that we can focus on the talents of our employees. We do this through our best practices covered in the talks:
Tip 1: Determine the frequency of your conversations in the HR cycle
Consider how often a conversation is needed with your employees. Do your organizational goals change often and quickly? Then we recommend holding The Good Conversation up to four times a year with weekly or monthly one-on-one meetings to follow up. This allows you to make timely adjustments to the employee and adjust employee goals as needed:
The Good Talk – reflecting on goals, development and career:
- combination of planning, performance and appraisal interviews;
- between employee and manager;
- proper preparation;
- guide = accompanying (online) conversation form with questions and topics;
- up to four times a year.
One-on-one interview – discuss questions, feedback and next steps:
- for every employee;
- between employee and manager/coach;
- continuous dialogue with content and structure;
- follow-up to The Good Talk;
- monthly or weekly, for example.
Here’s how Learned works:
In the Learned platform, we set the HR cycle for each team. After all, not every team has the same needs. Calls automatically synchronize with employees’ calendars, and automatic reminders mean we never forget a call! To a scheduled appointment, we add questions or talking points in advance that the employee adds before we go into the conversation. So we keep all the information in one place, which gives us more time to focus on what’s important: the development of our employees.
Tip 2: Improve the quality of conversations in the HR cycle
How to improve the quality of a conversation is how you do it:
> Give managers structure with a clear conversation form
We want to give all employees a fair chance to have a conversation that is about their development. The Learned platform contains more than ten interview forms that we use ourselves for interviews with our employees. We based these forms on the best practices of The New Assessment and they are available for free to any user who is registered as a “coach.
A sample of topics we discuss in The Good Conversation that are also included in The Good Conversation conversation form:
The Good Conversation – part 1: evaluation
We would be missing the mark if we do not respond to potential issues that arise in the revamped HR cycle. First, we remove barriers by looking at topics that are in the past. Only in this way can we ensure better cooperation.
We always start the conversation with the soft side, because we want to know if the employee enjoys going to work, what the reasons are for that and what we can improve.
Goal: To know how someone stands in the race.
Now that we know how someone is feeling, we look back at the past period. We evaluate goals, outcome agreements or responsibilities that stem from the employee’s job profile.
Goal: express appreciation or resolve (potential) problems early, keep goals sharp and celebrate successes.
3. Development and Competencies & Skills
We evaluate personal learning goals and development agreements. These were recorded by the employee at the beginning of the quarter. By dwelling on this more often, we implement the points learned into our daily work.
We look at the employee’s (desired) behavior and knowledge level. To do this, we use the required competencies and skills from this employee’s job profile. For example, do we see an improvement in skills because of the learning objectives he/she is working on? We want to not only dwell on where someone is good, but also look at how to turn a “7” into a “9.
Goal: discover talent (through analysis) and discuss commitment to development.
The Good Talk – part 2: looking ahead
To follow up on our revamped HR cycle as well, we will then discuss what is still ahead of us. That way we can plan and set expectations.
We look at what the employee wants to contribute to the growth of our company in the upcoming quarter. Consider, for example, (new) responsibilities needed for new projects or KPIs.
Purpose: setting business goals
5. Career Path
We ask about the employee’s ambition. Does the employee want to continue developing in the current role with additional responsibilities, for example, or is one interested (in the long run) in a different role within Learned?
Goal: Find out where the employee wants to go in his/her career.
6. Development agreements
We look at what competencies and skills the employee can further develop so they can perform even better in their current role or grow into their future ambition.
Goal: Determine together what new development goals the employee will work on.
7. Your feedback
Finally, we will discuss the feedback the employee has for the manager and what he/she would like to see improved within our company. Development comes from both sides.
Goal: To respond to feedback and areas for improvement about the organization and functioning of supervisor/manager.
What we don’t discuss (yet): terms of employment
Our conversations within our revamped HR cycle deliberately do not address terms and conditions of employment. In fact, in our way of working, assessments and remuneration are separate. Of course we use the ratings from The Good Conversation as input into determining the rewards, but we do not put them in line with each other. This means that we use our HR cycle to focus on development and not use it directly for benefits. We will schedule a separate meeting for this, namely in January or one month before the contract renewal.
First, we look at the wage space in our organization. We distribute these to employees based on their performance, talent and stage in their career. In this way, we put salary increases to optimal use for the employees we want to retain. We also keep this topic separate from the HR cycle.
> Use 360° feedback for greater insight
We have the employee fill out a questionnaire before the interview. The employee can choose whether to also solicit the opinions of colleagues and external colleagues or customers. That way, the manager gets a richer picture of performance and it’s a fair process for the employee. We integrated these feedback forms into our Learned platform. For example, one form allows us to store employee responses, peer opinions and manager feedback.
Tip 3: Follow up conversations in the HR cycle
We want to facilitate our employees in more feedback moments in the HR cycle so that we can build on the topics discussed in The Good Conversation and thus achieve our goals faster. To do this, we use one-on-one meetings that we have weekly (or monthly) with each other. In these conversations we discuss:
- brief evaluation (of past period);
- progress on the goals (which we had established in The Good Conversation);
- possible roadblocks in daily activities.
Scheduled calls in Learned are automatically synchronized with our online calendar:
Results of a revamped HR cycle
Renewing the HR cycle, is it effective? Yes indeed! The research firm Gallup examined the effects of a modern HR cycle and LinkedIn examined the effect of internal recruiting. The results are tremendous:
- Companies that invest in an ongoing dialogue in which the manager and employee engage with each other on an ongoing basis see a 280% increase in employee engagement (Gallup, 2016);
- Higher engagement works through in a 26% increase in the productivity of these teams (Gallup, 2017);
- A 41% reduction in voluntary employee departures. Millennials and Gen-Z are staying with these organizations longer (LinkedIn, 2020);
- A reduction by up to 43% in absenteeism ( Gallup, 2015);
- And the number of employees who drop out with burnout decreases 62% on average! (Gallup, 2018)
Example: how Learned itself deploys software for HR cycle
To support our HR cycle, we use our own (Learned) software. “Practice what you preach” we say then. The reason? We want to invest in the method of our one-on-one meetings and The Good Talk during the year with our employees. Our HRsoftware helps us do just that. In preparation for and after these interviews, we can record questions, answers and notes for easy retrieval. That way, not only do we have a continuous dialogue with quality, we can also monitor it afterwards.
Frequent conversations, which serve as a follow-up to The Good Talk, prevent potential problems from piling up. In our experience, it can make a big difference for organizations going through (rapid) change, think for example: start-ups or SMEs. The Good Talk that we do several times a year motivates us to continually express appreciation to our employees. We very often hear, “How nice of you to say that!” We are happy to share that experience with other organizations and HR managers.
Customer experiences: modern HR cycle in partnership with Learned
Learned HR software usage survey – (Q3) 2021.
- 8 in 10 users found it easier to prepare and conduct interviews;
- 6 in 10 users make more calls;
- 8 in 10 users find conversations more valuable.
Specialist in Geographic Information Systems (GIS) and Location Information for over 30 years. In doing so, one thing has always remained the same: you will find the best ArcGIS and FME experts, from Young Professionals to the most senior experts.
Results since revamping HR cycle:
- All employees (100%) completed one-on-one interviews in the first three months;
- 34% more goals set since working with Learned’s new HR cycle.
- Higher frequency of goals discussion;
- Move from working with goals on an annual basis to goals on a quarterly basis;
- Provides concrete insight into the employee’ s goals and job profile with associated skills;
- More consistency in quality of conversations;
Experiences since revamping HR cycle:
- It gives employees motivation to start a new goal once they have completed the previous one.
- Using relevant questions and topics that coach-coaches can use when having a conversation (using Learned conversation templates).
- Received help from Learned for training on the HR cycle and received appropriate support and materials through the digital help center.
Fronteer is Amsterdam’s creative strategy agency that has been helping organizations and teams build innovative strategies and concepts for years. In the middle of the NDSM wharf stands the building with Fronteer’s blue doors. This organization full of “creative connectors” works with the self-directed principles of holacracy. This means: everyone fulfills one or more roles, there is a lot of collaboration and the central focus is to continue to grow and develop.
Results since revamping HR cycle:
- More structure in conversations held;
- Low-level written record which is essential for fast-growing company.
Experiences since revamping HR cycle:
- The Learned software works with a very friendly interface, all the steps are very well explained and easy to follow;
- “We noticed that our team picked it up very quickly, which is nice with a new tool,” said Leonie Koelmans.
Learned software: employees do log in about 5-10 times a month!
Specialist in the field of Business Intelligence and was founded in 2001 by current directors Aad van den Berg and Jaco Geluk. E-mergo is a knowledge-intensive company focused on developing, selling and managing Bl solutions from Qlik, TimeXtender and Microsoft, among others, to customers. In addition, E-mergo does app development using platforms such as Mendix and Power Apps.
Results since revamping HR cycle:
- Adoption of the new (HR cycle) platform is high: both young employees and experienced seniors experienced the implementation as very positive;
- Higher frequency of calls;
- 500% increase in training hours attended since E-mergo used the Learned software;
- Employees rate Learned software 4 out of 5 in Employee happiness survey.
Experiences since revamping HR cycle:
- Everyone in the organization worked together to make the HR cycle a success;
- Employees take a proactive approach to training. Previously, they received many questions about this; now the trainings have been completed;
- Noticed benefits of the platform from day one: all calls were scheduled and made immediately.
- The whole process for conversations, development and goals were well established from the beginning.
“We noticed that our team picked it up very quickly, which is nice with a new tool!”
Update your HR cycle in 5 practical steps
Are you convinced? And is it time to update your (traditional) HR cycle? We wrote the e-guide ‘Design your own modern HR cycle in 5 (effective) steps’ in which we explain in 5 steps how you can improve your own HR cycle. We’ll give you pointers, tips and a variety of sample questions you can use to design or improve a new cycle.
STEP 1 – Problem identification: Identify the problems of the current HR cycle
→ Includes template: sample questions for surveys
→ Includes template: Sample interview questions
STEP 2 – Objective: Establish goals and principles of the revamped HR cycle
→ Includes template: Examples of sub-goals
STEP 3 – Design: Design the new HR cycle
→ Includes template: Sample questions for ‘The Good Conversation’
STEP 4 – Technology: Select supporting technology
STEP 5 – Implementation: Roll out the new HR cycle (step by step)
EXTRA – Tips: new HR cycle in use