Addicted to Performance Appraisals - Trust and Appraisals Don't Mix

Addicted to Performance Appraisals - Trust and Appraisals Don't Mix

The dictionary defines addiction as the state of being enslaved to a habit or practice that is psychologically or physically habit-forming (as narcotics) to such an extent that its cessation causes severe trauma. I am convinced business people are addicted to performance appraisals. Up to 90 percent or more of all organizations conduct performance appraisals in some form or another. It is therefore unnerving to realize that appraisal, more often than not, damage trust and performance, the exact opposite of their intended purposes. If one takes few moments to research how employees and/managers feel about conducting performance appraisals, one will find a paradox. The very same sentence will describe how the practice is universally hated and at the same time claim how it is one of the most important tasks for an organization. Surely this is a sign of addiction.

Performance appraisals come in different forms. They may range from the simple written appraisal of an employee's performance by his manager, to a more intensive method called the 360 degree feedback instrument in which all those who "surround" the employee - customers, boss, colleagues and direct reports give a rating (a grade). Typically, employees are rated (or graded) on a scale of 1 to 5.

Companies that rely on performance appraisals to evaluate employees have the best of intentions. Unfortunately, however, those good intentions frequently backfire into damaged trust and worse performance. Employees don't see the value of performance appraisals in their current form. The Watson & Wyatt WorkUSA 2004study revealed that only three out of ten U.S. workers say their company's performance management program actually does what it intends to do - improve performance. And only two out of ten workers say their company helps poorly performing workers improve.

Why are we addicted, why are they not working, and what can we do to break the addiction and replace them with a more effective and universally accepted practice? I hope to provide some answers to these questions here.

Why are we addicted?

We are addicted to performance reviews because we grew up with that same model in school. We have been taught to focus on the importance of improving the individual. The school system insists we all work on our own and it continually grades our individual efforts. The teacher attempts to "download" facts into our "empty skulls" while standing in front of the room, deciding the subject matter (curriculum) for us and pushing through the material to keep with a specified schedule. We are asked questions and are expected to raise our hands individually, competing for her/his time and attention, and give the "right" answer to her/his questions. After the dump of facts then we are tested to see if we remembered. We are graded as individuals. We rarely (at least not as a rule) are asked to work together in teams to share knowledge and learn from each other. We are rarely asked to learn in a group and synergize. We are held responsible for our own grades. We are treated as independent parts in the school. We regurgitate "facts" and rarely are asked to develop our problem solving skills (especially as a team).

As managers and leaders we have applied this same way of thinking about people to our organizations. We treat them as independent parts in the organization with little or no consideration regarding the context (environment) of the behavior. We grade them with little knowledge about how their behavior is influenced by the environment within which they work. There are benefits and drawbacks to this way of thinking. The main benefit is the ease of decision making. Grading an individual is simple and easy to do. The person responsible for the context (environment) has little or no responsibility and therefore has little work to do except assign a grade. They may also have to explain the grade if the individual complains but that rarely happens.

The drawback is, there is little or no evaluation of the context and so any search for flaws in the context rarely happens. If there is a problem in the context it usually will go undetected in this way of thinking. If the grade for the individual is poor, it is assumed the "problem is in the individual, not the context. Problems that reside in the context will continue.

Without trust we can't have predictable employeeengagement. Without predictable engagement we can't have predictable performance.

http://www.watsonwyatt.com/research/resrender.asp?id=ONL011&page=1

[ii] Cooperative interaction among groups, especially among the acquired subsidiaries or merged parts, that creates an enhanced combined effect.

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