Thursday, October 2, 2008

What if we got rid of performance appraisals?

I had a great meeting yesterday with two HR executives who suggested that, at least in their organization, they just stop doing performance appraisal. I can't tell you how happy I was to hear this statement. Whenever I teach, I preach the same thing. Why?

* Per the HR executive: Performance appraisal causes problems, takes tons of time, results in ratings that we all know are not quite accurate, and really - we want managers to talk to employees regularly not once a year.

* Push-back HR executive got from her team: We need them for legal reasons. She has been around long enough to know first hand that this is just not the case. Plus, if managers had 'regular' conversations, then you would have better data.

How do you assure regular conversations? We were talking about adding a question to a regular survey asking employees "are you getting feedback from your managers?" This is a simple solution - something that real managers would trade in for the yearly agony of having to fill out the long, painful performance appraisal forms.

Other defenses I've heard for keeping performance appraisal:

* The 'keep' argument: You need it for merit pay.

* The 'delete' argument: Let's face it - if you are lucky, you have 3% budgeted for merit pay; this is not even cost of living. Why not just give cost of living to everyone who does well enough to stay and then add a recognition program for above and beyond (outstanding) performance? You don't need performance appraisal for that.

When I teach performance appraisal, I title the section: "In search of the right form." Throughout history we have tried and tried to change the forms. Sometimes we go backwards and take what we used to do and change labels. In fact, one could argue that the recent move toward competencies are just BARS (remember those- behavioral anchored rating scale) all over again.

No matter how long the form, how complex the process, managers HATE doing it.

Doing the performance appraisal, no matter what, is a negative experience. It demotivates both employees and managers. I wonder what the effect on productivity is of performance appraisal. Managers hate doing it; employees hate receiving this formal document, and everyone spends way too much time on it.

I just want to say thank you to the HR executive I met who brought up this topic. And she is not with a small company; she is well trained in HRM, and I am convinced she can make it work.


Anonymous said...

You might want to check out a related article in the Wall Street Journal for October 20, 2008 by Samuel Culbert. He brings up many of the points you mention against using appraisals, and brings in a few more reasons why traditional appraisals are a bad idea.

Anonymous said...

We have struggled with the same issue. About 5 years ago, the HR Director at the time eliminated performance appraisals. Unfortunately, nothing was done to support managers in giving regular and on-going feedback. So now we are back to annual reviews. Why? Because employees aren't getting regular feedback, in spite of what managers say. We are implementing competencies for the first time as we believe the review form will help people understand what is expected and how and what to develop for the future.

Theresa M. Welbourne said...

I have a question for you Brenda - I've been doing pulse surveys with companies as frequently as weekly. These have 3 questions in 90% of the cases, and managers get their reports back within 24 hours after closing surveys. Not everyone does week (bi-weekly, monthly, bi-monthly are options). In addition, managers have an on-line action taking module (yes, we got rid of passive action planning in our language). So... I have this secret hope that if managers were held accountable for their actions, and they then responded to employees with ongoing interactive dialogues, that this process could replace performance appraisal. Do you think there is hope in this strategy?

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