Why are there problems with performance appraisal?
Professor Robert Sutton of the Stanford School of Business said "if performance evaluation was a drug, it would not receive FDA approval".
Studies show that roughly half the time performance evaluations make things better and half the time they make things worse. Clearly this is not a success rate that any organisation would want, particularly given the amount of time and effort they take up.
Thomas B. Wilson defined performance appraisal as "one of those special human encounters where the manager gets no sleep the night before and the employee gets no sleep the night after".
So what has gone wrong with an eminently sensible idea? After all Demming said "what gets measured gets done", so why can't we apply this adage to the performance of employees? To start, the following statements are two randomly chosen definitions for performance appraisal.
Performance appraisals are employed to determine who needs training and who will be promoted, demoted, retained or fired.
Performance appraisals are evaluation of the performance of an employee or a group that measure their contribution to the goals of the organisation by reference to traits, behaviour and results.
The different emphasis created by these two statements points to a few reasons why appraisals fail; they try to address too many issues and create uncertainty in employees' minds.
Here are some commonly cited reasons why appraisals fail.
- Organisations try to cover too many things (e.g. feedback, training and development, pay raises, etc.).
- Appraisals only operate for part of the year.
- They are not seen as meaningful as they are not aligned to goals and/or the achievement of goals is not monitored.
- If ratings are used they are based on managers' opinions, only include what they remember and can be demoralising for employees.
- Managers don't give honest feedback in order to avoid conflict.
- Ambiguity - employees believe criteria are vague and subjective
Unfortunately for too many organisations, performance appraisal has become something that has to be 'ticked off' once a year. This means that employees tend to see it as a process to be tolerated rather than an opportunity to develop and enhance their career.
What do we need to consider?
It is commonly accepted that organisations value employees who perform well and consider them to be a valuable asset.
However, people tend to see work done under the supervision of others as better than identical work done without as much supervision. This means that managers tend to evaluate work more highly if they have been involved in it.
Additionally the measures managers tend to use to evaluate their employees are likely to focus on how well they perform tasks and use this as an indicator of knowledge, capability and level of competence.
For employees, impression management and self-enhancement are common workplace behaviours and comprise two components; higher task performance and engaging in behaviour seen as beneficial to the organisation, which contributes to what they believe the organisation and its managers want most.
Employees who have a high self-enhancement motive tend to set their own performance goals and expectations and also may seek to expand the scope of their job.
Although this can be seen as commendable and indicative of initiative, it can also be problematic for managers seeking to set goals in performance appraisal sessions as they may feel they are losing control.
At the other end of the scale, problems arise with employees who are not so motivated and do not feel the need to impress their managers. This may cause them to limit their work effort to produce only an acceptable level of task performance.
So what does this mean for performance appraisal?
Employees are now better educated and have higher expectations and aspirations than ever before. They are also changing jobs more often to progress their career.
Studies show that employees in jobs that require higher cognitive skills are more motivated by challenge, mastery and purpose than monetary reward and therefore expect more from evaluation processes.
This creates challenges for managers in that they need to do more than just manage task performance.
So, what can we do?
We need to recognise that annual or bi-annual appraisals using the same format each time don't work. We need to look at evaluation processes with fresh eyes and acknowledge that all the work we have put into them is not delivering the rewards we want/need and change is required.
An important consideration in tapping into the changing work environment is that employees want to see their manager as a coach rather than someone who passes judgement.
We already know that if people do not participate in and "own" solutions to problems or agree to a decision, implementation will be halfhearted and misunderstood at best and therefore more likely to fail.
Evaluation/appraisal processes need to;
- be mutually understood and involve mutual communication
- have a strong development focus
- be grounded in business success drivers
- have clearly defined and communicated strategies and performance goals
- have appropriately trained managers
- incorporate ongoing feedback together with appropriate training
- have unambiguous position descriptions that are aligned with organisational goals.
- Always involve employees in goal-setting processes ensuring that they are flexible enough to reflect changing workplace conditions;
- Ensure performance metrics used are clearly articulated and measure the employee's success in meeting agreed goals
- Always ensure training to strengthen performance and progress career is discussed.
- Ensure "on the job" feedback is given continuously
- Develop an approach where the manager is viewed as a coach/mentor rather than someone who passes judgment.
- Encourage and expect the employee to provide information (not ratings) on his/her performance
- Align appraisals to salary reviews/increases/bonuses; use instead for development and communication.
- Use ratings systems
- Use the appraisal as a one-way communication
Remember, the most important aspect of performance appraisal is multilateral communication between the employee and their manager. Today's workforce expects this and will not respond to less.