Hey, Hey Performance Appraisals Must Go Away
| posted by Rodney CogbillI have chosen a much-debated idea for my first blog entry for two reasons: 1) it is an important topic that demands discussion and 2) what better way to start? In my organization, a regional financial services company based in Virginia, we are seriously considering doing away with performance appraisals and transitioning to a coaching and feedback culture that will require both manager and employee to engage regularly. I have already done much research on this, but one of the first truly smart things I did was order a copy of the book, “Abolish Performance Appraisals: Why They Backfire and What to do Instead” by Tom Coens and Mary Jenkins.
Performance appraisals are a relic. As the authors so summarily state “…appraisal does not work.” For every function that appraisals are supposed to serve, invariably the opposite will occur. As an example, let’s take an obvious one. Due to the inherent subjectivity and unreliability of performance appraisals, which encompasses rater errors and blatant favoritism alike, they should not be counted on to help your organization in a court of law if one day a former employee sues you for unlawful termination or constructive discharge. Why? Because if your managers are like the managers in most organizations, those appraisals will not paint the picture you would want a jury to see. You better believe that a plaintiff’s attorney will ask for the last 5-7 annual appraisals before they do anything else because they know the flaws of the process. Even a judge will often ask for them; maybe not for the same nefarious motive of an attorney trying to win a judgment, but rather to help cut to the chase and place one of the parties in a position of strength.
Let’s take another example – feedback and communication between a manager and employee. The performance appraisal process is supposed to foster this, but in many cases it will stymie any meaningful dialogue and partnering between a manager and their employees that is so necessary in today’s fast-paced world. Akin to that is another obvious one that a lot of people miss- improvement and encouragement. Most people already have inflated views of the value that they add to an organization, so what happens when they go in expecting all five ratings and get dinged with some threes and fours. Coens and Jenkins put it well- “Too often, appraisal destroys human spirit and, in a 30-minute meeting, can transform a vibrant, highly committed employee into a demoralized, indifferent wallflower who reads the want ads on the weekend.” I will take it a step further and update that quote by saying that most of them will be perusing the available opportunities on monster.com within two hours after that 30-minute meeting.
Managers hate them, employees hate them, and yes, most HR professionals hate them. So why do we continue to entangle ourselves in this annual charade? Simply put – tradition and no universally-accepted alternative. Even though most of us will admit that they are flawed and do not produce the results we expect, they have been around for decades and we feel we must use them to measure performance. The biggest reason is one of the most flawed, and that is tying them to raises. Compensation adjustments and performance appraisal should always be two different events, but they continue to be tied together. Let’s say that your company is having a tough year and sets its merit raise budget at 3% of compensation. I am a “highper/highpo” (high performer, high potential) employee who has put in an excellent year. My manager, who is simply fulfilling the wishes of the “C” suite rather than doing what they know to be right, gives me an overall rating that supports my expectations. Then the manager looks me in the eye and says, “I am going above and beyond… instead of the 3% all ‘exceeds’ employees are getting… I am recommending 3.5% for you.” Wow! Thank you very much! Now I see how much this organization truly values my contributions. You’d be lucky if that employee is still around in two months, yet this is the conventional wisdom that still prevails today, and which will continue to drain talent from organizations that probably could have retained it.
There are alternatives to the PA system, but I do not think there is a universal one that will fit for everyone. We don’t want another universal model to try and fit into because it removes the creativity and customization that all unique cultures need to have. As my employer heads down that road to find our alternative solution, I have no unrealistic expectation of an overnight change. While my manager, who is part of the senior team, is behind me, there is no guarantee that the CEO will ultimately buy into it. Even if that hurdle is crossed, a monumental effort will have only just begun. The task of changing the mindset among managers throughout the company will consume a great amount of time and energy. That part is exciting because I already know that most of them will view the change with glee, and then there is the challenge of convincing those that do not.
What I am seeking is input/feedback from other HR professionals or organizational managers out there who have thoughts about the PA system, alternative ideas that have worked, or just those who are either contemplating the same change or have already done so. What was the reaction throughout the company? How long did it take you to get where you needed to be? What were the stumbling blocks and challenges? How were they overcome? Would you do it all over again? Please feel free to post responses as I eagerly await them.
Rodney W. Cogbill, PHR
