Should We Get Rid of Performance Appraisals Once and for All?

Most of my work and effort is spent helping people build customer relationships, understanding the importance of these and developing a process that enables us to measure and track our effectiveness.

During this work, I’m often reminded that we don’t practice what we are doing with our customers, with people in our own company.

That thought process made me think about Performance Appraisals with companies I have worked for over the years and the fact that they seldom used them effectively.

An ineffective process results in lost credibility for Performance Appraisals, where they tend to become viewed as redundant. A 2012 U.S. poll of 2,677 people (1,800 employees, 645 HR managers, and 232 CEOs) by San Francisco-based rewards-and-recognition consulting firm Achievers, revealed 98% of staff find annual performance reviews unnecessary.

So does this matter? After all, it’s not like we use them properly is it? So why have them at all? In fact, if we eradicated them, it would save management and administrative time and result in more productivity.

Of course, we wouldn’t have any way to measure our people’s progress. Nor would we be able to have a formal process for having those difficult discussions that need to be had. Career discussions would seldom take place and any possible training required would probably be a thing of the past. What’s wrong with Performance Appraisals?

1. Not everyone in management is committed to the process

The poor understaffed and ill-equipped HR Department becomes Administrator instead of leader of the process WITH Management. If the leaders of our organizations are not committed to the process and it’s use, then no-one else will be either.

2. There is no consistency in how the sessions are held

When there is little training or guidelines on how to do a Performance Appraisal, every manager has their own view of how it should be done. Some think 30 minutes is sufficient, some an hour. Some managers believe it should be held in their office with a rather confrontational style of having the desk separate us and them. Others believe it should be held in a meeting room or at Starbuck’s where the environment is less formal.

3. There is no consensus about how and why they are conducted

Some managers believe in developing the employee and there should be a two-way conversation. Others believe it is the opportunity to formalize and detail all the bad things they have spotted and use it as a whipping session.

4. The Performance Appraisals are set up so people are either Winners or Losers

When you link Performance Appraisal sessions to remuneration, then you set up the session as a challenge and test where the employee becomes defensive and less honest then they probably would be if remuneration wasn’t linked. If a raise or bonus depends on the results of the performance appraisal, is the discussion going to be as open and honest as it should?

5. Meeting once a year is insufficient

Most companies adhere to the year-end Performance Appraisal model. The problem with that, is that if bad news is to be delivered about performance, we have wasted a year to help correct it. The way business moves today, goals needed to be set more frequently and reviewed more often than yearly.

6. The process is set up so it feels judgmental

Performance Appraisals can often feel like a visit to our banker or lawyer. The person the other side of the desk goes through a list of things and then asks you to sign your life away at the bottom of the form. Sound familiar? No wonder people get defensive and don’t feel part of the process.

7. Performance appraisals are based on a manager’s perception and metrics

One person’s perception is another person being misunderstood. Sometimes the chemistry just doesn’t work. We all have different views in different situations.

So is there a way we can make performance appraisals more meaningful? How do we change things in a way that we capture the essence of ensuring we are developing our people and are focusing on improving performance? Here’s a few suggestions:

Provide a cultural framework for our leaders

Focus on corporate values which coerce our management into hiring and managing to this framework.

Invest in our leadership 

Provide the skills, knowledge and tools to help senior management manage better with a continuous development process.

Review goals quarterly

Have on-going performance discussions in weekly one-on-ones and also review quarterly. Force managers to provide on-going feedback which makes the process easier. Employees appreciate this as part of the culture.

Assume employees know how well they are doing

Most of us know whether we are delivering, right? Let employees self-assess themselves and be instrumental in setting their goals.

Separate performance discussions from remunerations discussions

Separate the discussion from how well we are doing and how much we are going to remunerate you. One should be on-going and one should be annually.

Focus on hiring the best

Hiring the best people that meet ALL the criteria of the position is hard work but needs to be a priority. Assume that if we hire the best we don’t have to worry about low performers.

So should we get rid of Performance Appraisals once and for all? As we currently know them and use them, probably yes. But with a few changes and tweaks and a new name we should provide on-going feedback which will result in motivated and happy people.

What’s your view on Performance Appraisals and would you change the way they are done at your company?

About the Author:

I am the customer relationship mentor, who helps those responsible for their company’s most important customers, to build and maintain their customer relationships and keep them happy, so that they can protect & grow their business.

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