I was reading an article recently that suggested performance appraisals are for (1) providing feedback, (2) modifying or changing behaviour and (3) judging future job assignments and remuneration. The author then suggested present systems of performance appraisal do not serve any of these functions well. In fact, his view was widespread dissatisfaction with performance appraisal is bound to continue and quoted a HR Practitioner who stated that “performance appraisals are the Achilles heel of our profession”.
He continued that it is widely recognized that there are many things inherently wrong with most of the performance appraisal systems including:
No matter how well defined the dimensions for appraising performance on quantitative goals are, judgments on performance are usually subjective and impressionistic.
Managers using them to compare employees for the purposes of determining salary increases often make arbitrary judgments.
Ratings by different managers are usually incomparable.
When salary increases are allocated based on a normal distribution curve, competent employees may not only be denied increases but become demotivated.
Basing promotion and layoff decisions on appraisal data leaves the decisions open to acrimonious debate.
Although managers are urged to give feedback freely and often, there are no built-in mechanisms for ensuring that they do so.
Performance appraisal needs to be viewed not as a technique but as a process involving both people and data, and as such the whole process is inadequate.
I am sure everyone reading this would agree with his views.
It is from a 1976 article by Harry Levinson published in the Harvard Business Review (Source: https://hbr.org/1976/07/appraisal-of-what-performance)
It incredible that I was still in school in 1976, yet the same problems confront performance appraisals almost 50 years later. And the same processes are still being taught to undergraduate students.
However, effective systems that are better at providing feedback, modifying behaviour, and judging future job assignments and remuneration do exist.
One I have successfully applied for many years starts with accepting that modifying behaviour only applies to a small percentage of the workforce. I call them the 2%-ers. You don’t need to appraise them, you need to focus on the business problems their behaviour is causing, then fix that problem.
Once the 2%-ers are removed, you no longer need to appraise the remainder because, by definition, they are all performing at least at a satisfactory level. Any sense of inadequacy managers may have about appraising subordinates is now removed.
That leaves judging future job assignments and remuneration. Our system can now focus on future opportunities for the employee and any remuneration increase based on the appropriate criteria.
This model has worked from childcare centres to coal mines, from factories to professional services firms.
Let’s stop tinkering with the current broken system and apply systems and processes that work.