PERFORMANCE APPRAISALS - GETTING IT RIGHT

(Brendan Coutts, 'Executive Excellence' - Dec 2004)

Virtually every worker feels they do a good job, and the vast majority of managers also believe most of the people who report to them do a good job. Despite this, almost everyone dreads performance appraisals. Workers often fear them, while management views them as a necessary evil in order to monitor and control performance in the organisation.

Not only are performance appraisals unpopular, they also do not perform very well. In their book 'Abolish Performance Appraisals', Coens and Jenkins cite a range of U.S research on performance appraisals. One study found 90 percent of appraisal systems to be unsuccessful. And there have been similar results found in Australia, with one study reporting that 80 percent of managers were only moderately satisfied or less with their performance management processes.

Despite the continuing emergence and refinement of new appraisal tools, organisations are often disappointed by the success of their performance appraisal processes. Even the best processes are subject to unavoidable biases and flaws, which seem to be why companies are willing to settle for the inefficiencies of their appraisal systems. But not only is the information obtained in performance appraisals unreliable, the whole process is often counter-productive and can serve to reduce or limit employee performance within an organisation.

While performance appraisals can be used in many ways, fundamentally they are aimed at improving individual, and so, organisational performance. However, because they are based on a top-down approach where management must monitor and control workers to conform to set performance criteria, they tend to generate fear and mistrust amongst employees. Appraisal processes that are initiated and controlled by management tend to disempower workers, who are placed in a subordinate position of dependence.

Most employees strive to perform in their positions. They believe they are performing well and expect to be recognised for their efforts. Negative feedback from performance appraisals can be very distressing and can damage the morale (and performance) of everyone in the workplace, including the supervisor who conducts the appraisal.

There can be so much fear around the performance management process that employees may begin to focus on pleasing their supervisors rather than doing what is best for the organisation. They might focus on avoiding the mistakes that are specifically assessed by the performance criteria, rather than on performing at a high level.

In a call centre reviewed by the Hawthorne Academy, it was discovered that performance was partly assessed based on the number of calls taken per hour. As a result, employees concentrated on increasing the number of calls they took per hour to meet their required call targets at the expense of the quality of service provided to customers. It might be argued that quality of service should have been included as a performance criterion, but this misses the point. The issue here is that when management tries to monitor and control performance through appraisals, the employee's focus will be on attaining a good performance appraisal, rather than achieving high performance. It is difficult to achieve outstanding performance under these circumstances.

The performance appraisal process appears to provide objective information, but in reality it is dependent on subjective, imprecise and arbitrary processes, with ample opportunity for human error. Raters who conduct appraisals unavoidably bring their own bias and prejudices to the process. They have opinions and beliefs about those they assess, which prevent objectivity. Either consciously, or subconsciously, stereotyping - based on factors such as age, gender, race, personality, and dress - can corrupt the appraisal process.

In addition, the rater might be inherently lenient, or severe, or their impression about performance for one criteria could influence their idea of performance for another. Bias can also result from raters feeling responsible for the performance of the person being rated - that the rating reflects on themselves as well as on the person being appraised.

Beyond all these accidental sources of error, there is also the potential problem of deliberate manipulation of ratings to achieve desired results. Whilst processes that use multiple raters (such as 360 degree feedback) reduce the effect of some of these biases, they can also introduce others.

Where it aims to promote better performance, traditional appraisals can lead to reduced performance through disempowering employees and reducing morale. This is particularly dangerous because the loss of performance is not measured by the performance appraisals that cause it.

Dependence on performance appraisals can often blind management to the real performance issues in the workplace and can lead to misdiagnosed organisational problems. Total Quality Management has shown that performance is a product of the entire system within a workplace, rather than the contribution of individuals in that workplace. Poor individual performance is often the result of poor systems, whereas outstanding workplace performance is possible only when the structure and dynamics in the workplace are optimised. It is the system that should be constantly appraised, rather than the employees within that system.

The irony is that it is often the employees who best understand the systems within a workplace. They can identify the systems' strengths, weaknesses and potential from a perspective that is not available to management. When gauging performance levels in an organisation, it is perhaps the employees who should evaluate the workplace and its systems, rather than have management evaluate the employees. The Hawthorne Academy is constantly amazed by the amount and quality of vital information that is known to employees, but which is not known by management.

This information can be accessed by having staff appraise their work and organisation. When workers can point out what could be done better, highlight how systems might be improved, and identify elements which affect their performance, a better idea of the functioning of the workplace can be realised. Employees can feel more responsible, trusted and valued, and solutions to problems that management were not aware of may be discovered.

As with traditional performance appraisals, this information is also subject to some of the above biases. However, these personal attitudes are an intrinsic part of the systems and dynamics of the organisation and of workplace operations. A significant part of the value of this form of workplace evaluation is that it taps into these informal feelings and relationships which more formal methods of assessment try to suppress. The result is a less formal, but more accurate picture of the way the workplace is performing.

Where it is done properly, this process can not only provide a great deal of new information relating to the performance of the organisation - which would never have been detected by traditional performance appraisals - it can also serve to promote performance in itself. This process encourages staff to focus on what might be possible, not just how to avoid failure. It can bring to light potential system improvements which would increase efficiency as they would be more aligned with the abilities and needs of the employees.

When they are trusted, heard and their information acted on, employees become more motivated and engaged in their work. As a result, workplace relationships can also improve.

Where this type of appraisal is used, workers will want and need greater access to information regarding their organisation. They will take more interest in the organisation as a whole, not just their own part of it. Work can therefore become more fulfilling for both management and employees.

This type of appraisal is not always easy. In most organisations, employees are not accustomed to their thoughts and opinions being of value to management and it is often difficult to encourage people to express themselves openly. They can be critical of the process and may be hesitant to disclose their true feelings.

For this reason, voluntary, confidential, non-directive and anonymous interviewing of staff is the best way to ascertain their true feelings and ideas about their environment. Confidentiality in particular, is very important, so the process is more effective when the interview is performed by someone not directly associated with the employees or their supervisors. If supervisors conduct the interview themselves, the effectiveness of the process can be negatively impacted, as employees will feel vulnerable and will be less likely to provide candid responses.

When workers understand and trust the process, they are generally very willing to contribute. When a representative number of workers are interviewed, consistent themes and issues usually arise, often painting a powerful and unexpected picture of the efficiencies and inefficiencies of the workplace.

The success of the process, however, is dependent on management having the courage to accept criticism and reassess its own attitudes. Success is also dependent on management being prepared to act on the information learned from the process, because if they fail to do so, relations with staff will suffer enormous and often irreparable damage.

Employees have an enormous amount of information relating to organisational performance, and their important perspective cannot be obtained through the hierarchical practice of performance appraisals. Moreover, perpetuating a perception that management is constantly monitoring and controlling employees through the use of traditional performance appraisal methods can be counter-productive.

By encouraging employees to appraise their workplaces and organisation, and by listening to what they have to say - however painful it might be - the performance of workers and of the organisation are more likely to be optimised.