The last Vantage Point post discussed Situational Leadership and how leaders should adapt to each staff member individually in a collaborative environment.  Unfortunately, one area that most organizations fail to follow this model is performance measurement.

I came to realize this after I read another book that made a profound impact on me:  Abolishing Performance Appraisals, Why They Backfire and What to do Instead, by Tom Coens and Mary Jenkins.  I had seen and participated in a wide variety of employee performance evaluation systems in my first few jobs, and had the nagging feeling that there had to be something better.  Then, voila, I read this book and the proverbial light bulb went off in my head.

I believe most performance appraisals systems are at best mediocre and at worst terrible, and ultimately counterproductive.  Yet, such systems persist and I ask, why?  The best answer I can give is organizations and managers are often misled and seduced by ostensibly rational methodologies that do not fully take into account actual human behavior and are based on flawed assumptions.

First, here is a succinct definition from Coen and Jenkins of how employee performance appraisals are commonly done: “The practice of performance appraisal is a mandated process in which, for a specified period of time, all or a group of employees’ work performance, behaviors, or traits are individually rated, judged, or described by a person other than the rated employee and the results are kept by the organization.”  Further, it is helpful to define the intentions and purposes of appraisal—in other words, the functions that appraisals are supposed to fulfill:  improving performance, providing coaching and guidance as part of feedback and communication, setting compensation, making staffing decisions, defining professional development needs, and documentation for disciplinary actions.

Sounds great, right?  Well, I don’t think so.  Here are a few of the assumptions underlying the conventional wisdom outlined above, all of which have significant problems:

  • One process can serve several functions at the same time – but, such complexity creates conflicts between functions, e.g., setting compensation undercuts honest feedback.
  • One size fits all works well for everyone in all situations – but no two employees and supervisors are identical, each have their own strengths and communication styles which vary over time.
  • Commitment can come from a compulsory process – in reality, commitment to growth and development is better nurtured when there are choices within a supportive, encouraging environment, not within a forced template.
  • The organization and its supervisors have primary responsibility for the system – such a top-down approach does not empower staff to take responsibility for their own development, etc. Ultimately, most appraisal systems primarily serve the needs of the organization, NOT the employee, which is backward.
  • Appraisals can be done objectively and reliably – but ratings are actually fraught with bias and subjectivity, often based on unreliable information/measures that are not aligned with organizational and personal goals; e.g., systems that reduce ratings to numerical values and plot them against a performance scale have the veneer of objectivity and rationality (numbers!), falsely giving the impression of accuracy.
  • Ratings motivate employees to do better – not true when ratings are flawed (see above) and create a competitive, not collaborative, environment; further, ratings that do not align with employee expectations actually demotivate.
  • Periodic appraisals (typically annual) are effective – when ratings are relatively infrequent and formal, communication is calendar/system driven instead of event/personally driven as it should be in an open and supportive workplace.
  • Extrinsic rewards motivate employees – this assumes people are naturally unmotivated, when in reality employees are already intrinsically motivated and what truly motivates each person varies. Also, “Pay for Performance” really doesn’t work well in practice — yes, rewards can motivate at times, but we must also recognize that inadequate money and recognition may demotivate.

This is not a pretty picture, especially when you realize that most appraisal systems rely upon these assumptions.  So, why do we persist in this way?  Well, here are a few reasons:

  • Inertia – it’s much easier and convenient to just do it the way it’s always been done and that HR says it should be than to do the hard work to change things for the better. Why take that risk?
  • Ignorance, part 1 – there is very little written about or taught about effective alternatives. Further, managers are often blind to the damage that appraisals may be causing in the workplace.
  • Ignorance, part 2 – most people deceive themselves that an appraisal system will recognize and reward them with pay increases, promotions, and other perks (this results in part from 80% thinking they are in the top 20% of all performers).
  • Fear, part 1 – it is apparent that in top-down organizations many managers, whether they admit it or not, enjoy the fact that the appraisal process feeds their power and the fear of staff to act independently.
  • Fear, part 2 – people are afraid that having no appraisals will result in arbitrary decisions about pay, career advancement, etc., while clinging to the illusion that an appraisal will accurately tell them where they stand.
  • People subscribe to the worthy goals that appraisal systems purport to deliver.

So, what works better?  This will be addressed in the next blog post (sorry, this post is already too long!).    Meanwhile, please comment on any of the above and let me know what has worked for you in your career.  The best comments will be included as we explore performance appraisals more fully.  Thanks in advance for your help.

The contents of this blog post are based in major respects on these two books:  Abolishing Performance Appraisals, Why They Backfire and What to do Instead, Tom Coens and Mary Jenkins, Berrett-Koehler Publishers, Inc., San Francisco, (2000), and Get Rid of the Performance Review! How Companies Can Stop Intimidating, Start Managing—and Focus on What Really Matters, Samuel A. Culbert with Lawrence Rout, Business Plus, New York, (2010).

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