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Performance Failure or Performance Appraisal Failure – Part I

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Image credit: <a href=''>iqoncept / 123RF Stock Photo</a>I once told a fellow HR colleague that the only way anyone could really hurt me with an employee performance appraisal would be if they rolled it up and jabbed it in my eye. Of course that was back in the day when we actually used paper for such things. Today in most companies the process uses enough electrons to render an employee sterile… or at least slightly radioactive. If you are reading into my cynicism that I am not a particularly close friend to appraisal systems you would be dead wrong. From my perspective as a card-carrying HR professional, all of my training, experience and instinct tell me that an effective performance management system is critical to the business of running a business. As an employee, I never really felt that any system that I was forced to obey really mattered. It made things worse when from the perspective of an insider to the system I have been privy to what HR, management and employees really think.

It should be clear that the purpose of this three-part series is not an exposé of performance management wrong-doings or mistakes. It has been hard not to form a somewhat cynical viewpoint when reviewing this topic to prepare this report because the result of research into recent data, blog comments and personal interviews and observations show a process that is crying out for change. One ground rule that is self imposed in writing this series is that each problem area must be connected to a proposal to counter that problem. I am looking at this as jumping onto a moving train… much has already been said, it is now my turn to speak, and hopefully the growth of our collaborative intelligence can play things out in the laboratory of actual business practice. Proof comes with results, not in spouting theory. I would only suggest that the continuing dialog involves proposed alternatives rather than simple criticism.  

It should be like Management 101 to understand this concept: Any resource that must be managed by a business must have established benchmarks that define expected productivity as well as systems that provide the ability to measure deviations from that standard. Does this sound like a budgeting process? Of course! Financial resources are managed by a series of measurements that constantly offers direction to the occupants of corner offices on the top floor. A positive variance means success. The human resource is no less important, but the typical systems in place to advise upper management about the status of their workers leave a lot to be desired.

Part I – The Basics

  1. Annual review systems are dysfunctional. There are several approaches to dealing with this scenario: review on some pre-determined employee anniversary date or an all out review blitz that happens at the same time each year. There are advantages to both methodologies and several in-betweeners, but the biggest fallacy is that it de-emphasizes management of performance at all other times. There is almost a diaper-change mentality that it must be done or the resulting mess will be hard to clean up. There are ways to make this work using interim appraisals, but most leave room for a sudden “surprise” moment when the review happens. Is there any further proof necessary that management of the human resources gets lower billing than other resources? The company does not wait until the end of a fiscal year to suddenly find out how they are doing financially. Proposed: Schedule no less than monthly one-on-one discussions between employees and their managers to discuss work, reset goals, and mutually agree on next steps for both enhancement of current company targets and personal career goals.   
  2. Management by objectives is archaic. Of course there have to be goals for measuring performance, but most MBO performance management systems are over-complicated and inflexible. Meeting preset personal objectives often do not mesh clearly with overall company objectives and in some cases are in opposition to overall goals. For such a system to succeed there must be accurate crystal-balling of events that may change during the life of the objective cycle. The most often heard criticism from employees is that they are ordered to perform other work than defined in their objectives which make the objectives impossible to reach. Conversely, blindly meeting objectives at all costs and assuming that this defines satisfactory performance can result in poor management judgment. Proposed: Meaningful short term progressive goals need to be implemented to replace long term personal objectives. Factoring in the element of timing of execution also allows for total flexibility with some goals being cancelled and replacement goals added without penalty.
  3. Forced appraisal timetables leave managers frustrated. Good management practices and training place the responsibility for employee performance on those supervising the work of employees, but that responsibility usually doesn’t come with the authority to do so independently. It is virtually impossible to dictate a standard recurring cycle for all employees for all circumstances. Unique challenges do not happen on a predictable timetable; rather they must be addressed immediately. Issues in performance and opportunities for motivation lose effectiveness if gathered into a tickler file and then opened at some later date for discussion. The combination of unnatural review periods and other flaws drive managers to consider the process as a necessary evil HR function and not as a tool for improving performance or making a contribution to the bottom line. Proposed: Managers should be allowed to make ad hoc reviews on a sliding timetable at will without regard for any standard reporting period.   
  4. Subjective evaluations draw skepticism on the part of employees. Depending somewhat on the quality of management and the degree of engagement, some employees approach formal performance reviews with apprehension. Some of this reaction comes from systems issues already mentioned as shortcomings, but also the overall impression that sometimes appraisals are based on personality traits rather than performance. Like other forms of disparate treatment, the belief that there is discrimination in itself defines a problem. Paragraphs of adjective-laden text confirm suspicions that the goals and objectives are not really measurable and are at best the manager’s best guess. Proposed: Goals must contain standards that define success or degrees of success that are measurable and not subject to interpretation. Outcomes that are not contributing to company targets cuts off the employee from any feeling of making a meaningful contribution to the bottom line.
  5. Tying performance appraisals to pay raises misses the point. There is no way to prevent the impression among managers and employees alike that budgeting for pay increases is the primary purpose of such a system rather than managing performance. Pay for performance is a great concept, but execution is clumsy and misleading. In a tight economic market when annual increase percentages are low, there is really not enough differential between the high and low performers to provide a positive incentive. Ironically, the inherent privacy of individual reviews makes communication of performance standards and achievements difficult. This leaves each person to interpret their situation out of context and perhaps unrealistically. Proposed: Disconnect pay from the performance management and focus each on the purpose of the respective reviews. The purpose of managing performance is to engage employees to commit to company objectives through individual actions.

These five points are the usual suspects that create turmoil in performance management. There are still other distinct factors that need to be examined to completely and realistically improve the current situation in such systems. Part II will focus on modifications and enhancements that were supposed to fix system shortcomings but may have made matters worse.




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