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Performance Evaluation - It's Time to Change Your Perspective

Most Human Resources professionals dislike performance appraisals as much as every other manager, supervisor, and employee.  In a recent poll conducted by Society for Human Resources Management (SHRM) only 2% of HR professionals gave their performance appraisal system an “A” grade.  They gave “B’s” and “C’s” 74% of the time.  The remaining 24% gave their systems a grade below “C”.  There are a lot of people looking for help on the subject of performance appraisal.  A query of Amazon produced 25,000 books on the subject “performance review”.  

What’s the Problem?

So, why is performance appraisal universally disliked?  Why do organizations invest so much energy and time in a system that is generally considered ineffective and may actually be detrimental to high productivity? What are some of the realities that work against an effective plan?

Creates Competition

In the 1980’s, Jack Welsh, GE’s CEO, made famous the “rank-and-yank” system where the bottom-tier employees became immediate candidates for recruiting.  This approach creates competition. The natural instinct is to look better than the next guy, which may become a higher priority than collaborating to produce value-building results.  

Impact of Budgets

“Why should I do performance reviews when we don’t have any money to spend on pay increases?”  This sentiment was commonly expressed during the recent recession and continues into recovery.  Budgets remain tight.  Many managers believe that performance evaluations are mostly about wages and salaries.  But pay and performance evaluations are not inextricably linked.  Employees want and need to be kept informed about how they’re doing or whether they are meeting expectations regardless of pay.  Constructive feedback is fuel for performance excellence.  Increasingly, companies are granting across-the-board increases and recognizing performance through bonuses.

Performance Measures

Many performance appraisal plans use cascading performance objectives.  They start with the organization’s mega-goals.  Then, each department develops supporting objectives.  At year end, when all of the objectives roll up – voila! The goals are met.  But, priorities and circumstances change. Goals are abandoned, replaced, or forgotten.  Building the structure takes so much effort, there is little energy or inclination to keep it current as circumstances change. As one gets to year-end there may be little to talk about.

Rater Inconsistency

To be perceived as fair, performance standards need to be consistent across the organization. In a study of performance evaluation at Deloitte, it was found that “62% of the variance in performance ratings could be accounted for by individual raters’ peculiarities of perception.”  There may be little hope of eliminating rater inconsistency.

What’s the Answer?

There are many more reasons that organization struggle with performance appraisal, but there are some ideas that may help make the system more effective.

Build a Culture that Values Development

If management really values talent development, managers will be evaluated on how many of their people are performing up to their full potential or are ready for promotion.  Once an employee is promoted and is successful, his/her former manager should be recognized for his/her contribution.     This speaks to the quality of the coaching that an employee receives.  Managers who prove to be good coaches should become organizational leaders.  Performance management is not an HR program, it is part of an organization’s DNA.


Very few people look forward to the performance appraisal “event”; the annual evaluation.  But what if the “event” became a positive, future-oriented conversation about mutual goals?  Performance, good and bad, happens every day.  Capture the “teaching moment” and discuss it then. Have a conversation about performance every month to “check in” and learn how an employee is doing and provide feedback.  Even the best employee isn’t perfect at every aspect of a job.  Thinking as a coach, your job is to understand and build your team, one task at a time.

Four Questions

In the Deloitte study, research was used to arrive a four carefully worded questions that leaders answer to assess their followers’ performance.

  1. 1. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus. The response is a five-point scale from “strongly agree” to “strongly disagree”.
  2. 2. Given what I know about this person’s performance, I would always want him or her on my team. The response scale is the same as question #1.
  3. 3. This person is at risk for low performance. Response is “yes” or “no” with additional conversation about how to intercede if “yes."
  4. 4. This person is ready for promotion today.  Response is “yes” or “no” with suggestions about possible next steps.
These questions are designed to be simple, yet revealing, regarding an employee’s current performance and potential for the future.

To be truly effective, human resource development (performance optimization) needs to be part of the organization’s value system, along with rewards and recognition for success. Managers must learn to become effective coaches.  Like leadership, coaching is not an innate skill – it must be acquired through training, coaching, and experience.  

*Marcus Buckingham and Ashley Goodall, “Reinventing Performance Management”, Harvard Business Review, April, 2015, 40. 

Written by: Joel Myers, The Centre Group

Posted: 6/23/2015 7:30:00 AM | with 0 comments
Filed under: business, centre, evaluations, group, human, joel, myers, personal, resources, Small, the

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