Most employee performance appraisals fail to improve performance and damage management credibility. Good performance appraisal systems in the workplace are like the abominal snowman, rumored to exist and sightings bragged upon, but never actually seen. Most supervisors and most employees dread the practice. Why? There are four obvious problems.
Problem 1. Management misuses them.
Most organizations SAY that appraisals are intended to improve employee performance but use them for other purposes. The ideal system allows supervisors and subordinates to communicate about needs, goals, and ways to improve performance in a collaborative process akin to coaching. However, management screws it up by using the results for pay raise and promotion decisions. Making a person’s pay depend on his or her performance rating changes the process from collaboration to a competition between supervisor and employee. The supervisor, under pressure to prevent ratings inflation, points to the employee’s deficiencies. The employee, seeking to increase income, points to strengths and makes excuses. The dynamic is no longer about improving performance.
Then there’s the “ratings inflation” issue. The U.S. Army famously destroyed the objectivity of performance ratings by keying them to promotion decisions. Decent superior officers didn’t want to ruin their subordinate’s career with anything less than a top rating; while malicious ones deliberately downgraded those who disagreed with them. The result was massive “ratings inflation” and loss of many good officers. There are many such examples of misuse.
Problem 2. Management insists that ratings fit a distribution.
Applying an artificial distribution like the bell curve to performance appraisals is management malpractice. The bell curve (Gaussian Distribution) exhibits a bell shape with a few high values, a few low values, and a bulge of most values around the average. I’ve seen senior managers and Human Resources types draw a bell curve to explain how performance ratings should be distributed. (They weren’t laughing when they did that, so they were either liars or math dunces.) I’ve been told that I had given too many low ratings or too many high ratings and instructed to change some of them in order to achieve a bell curve. That’s total and absolute nonsense.
Bell curves apply only to large numbers and to some random variables, including dice rolls and the length of peoples’ fingers. Any measure that people can manage is not random. Consider the high jump in track and field. If we pulled people off the street at random and got them to jump, we might get a bell curve of maximum jump heights. But if we look at the statistics from a high jump competition, we see instead a skewed, tightly clustered distribution (a gamma distribution with low k value) because those athletes have trained and been coached to do well. Similarly, people train to do their jobs and are coached by supervisors to do them even better. Whatever the distribution is, it isn’t a bell curve and never will be. Further, it will progressively shift toward higher average performance (i.e., rating inflation) if management is doing its coaching job and not destroying productivity with ill-conceived policies.
Problem 3. Appraisals are too infrequent.
Most appraisals are conducted once or twice a year because it’s a convenient schedule. Unless someone has kept meticulous notes, it becomes a struggle to remember who did what and how many times. Any serious attempt at quality improvement in manufacturing or customer service is applied continuously, not in once-a-year retrospectives, and so it should be with performance appraisals.
Problem 4. Different supervisors rate differently.
Some supervisors grade hard (think Steve Jobs’ abuse of his employees, even the great ones) and some grade easy (think Elwood P. Dowd in my post, “Plays Well with Others.”) A few rating systems use the supervisors’ overall average rating in previous appraisals to normalize them for comparison. That doesn’t solve the problem, since it neglects the coaching effect that good supervisors use to boost performance. A great supervisor gets great performances and eventually gives more superior ratings. Why should an average performer on a great team get the same normalized rating as an average performer on a mediocre team? Nonsense piled on nonsense.
Solutions?
I have ideas on how a performance appraisal system should work, but would like to hear your thoughts first. In your experience, what works? What doesn’t? Comment below.
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ReplyDeleteThis is an interesting post but I don't agree that performance ratings shouldn't be tied to pay. If there are no consequences to a bad rating, people won't take them seriously.
ReplyDeleteThanks for the insightful comment. It's true that some employees will disregard appraisals unless there is a carrot or stick attached. My experience has been that most people WANT to do good work and will readily accept constructive advice. Some people can't or won't and sometimes the organization will be better off without them. Would it help if bad performance ratings could be used to fire or demote people?
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