So unpopular are appraisals that Jim Heskett, writing for the Harvard Business School says employee performance reviews rank alongside "undergoing root canal dentistry work on the list of least favourite things to do both for employees and managers".
A survey done by the Society for Human Resources Management concluded that more than 90% of performance appraisal systems are a failure, with managers and employees saying they view an impending review process with dread. HR departments routinely report that they have a desperately hard time getting managers to deal with performance appraisal.
The traditional performance appraisal system was designed for a work environment where control of individual employee performance was a key function. Such an approach doesn't sit well in a modern values-based, participative working model, because it seems a paternalistic, top down and autocratic way of managing.
The HR department of a large organisation typically uses a standardized model for annual evaluation, which their managers and employees dread, dodge, fudge or bypass until they have, grudgingly, to comply with the system. The users hate the forced comparison, box-ticking exercise they see foisted on them and if they collude to buck the system, there is not likely to be any buy-in to stretch goals that challenge and motivate employees.
In general managers aren't trained to do appraisals well, so employees don't feel they get any benefit from the process; and, consequently HR have a nightmare on their hands trying to get all the data gathered in time for the salary evaluation round.
A PA system is, of course, supposed to address significant areas of concern to management and HR:
- Performance management
- Alignment of individual performance with organisational objectives
- Aiding employee development and growth
- improved communication
with the aim of improving the performance of individuals and the organisation as a whole. For most it doesn't seem to work very well. A 1998 study by Development Dimensions Incorporated, found that employers expressed overwhelming dissatisfaction with performance reviews.
So what can we, as HR professionals, do to the appraisal produces more productive and less painful?
HR needs to sell performance appraisal as a development tool and persuade management of the benefits that will accrue.
An employee appraisal review ought to be an opportunity for dialogue between manager and team member, a chance for the employee to express her perspective on the role, the organisation, her manager, her view of her performance, ideas to improve operations and processes, her aspirations to grow in her job. Appraisal should be a time to stand back the review what works, what doesn't and what is needed to do better going forward.
To be successful, an appraisal needs commitment from both parties, and to be held in an environment where ideas and views can be expressed openly. Peter Honey, a psychologist and management consultant says that while formal appraisal systems usually put the onus on the appraiser "they work far better, however, when the appraisee takes the initiative and is determined to use the occasion as an opportunity to solicit feedback".
Managers need to work with an agenda set by the appraisee to discuss short and long-term career goals, skills to acquire, opportunities of interest, mentoring possibilities, and so on. The manager may add to the agenda but in the first instance the employee "self-assesses"; the manager gives feedback then goals can be set that align with organisational objectives. The appraisal becomes a negotiation with the manager mainly concerned in what backing, support and resources the employee needs in order to achieve their goals.
If we accept that the prime responsibility of a manager is to manage the performance of people and that this is best done proactively and with joint ownership then we have to acknowledge that for appraisal to be a positive experience it has to be a two-way conversation, an exchange of ideas and information.
So, one size does not fit all. For a free format process to work there has to be a climate of trust and respect. The manager needs to understand what motivates the employee. For a sales team that's relatively straightforward but technical and knowledge workers it might require more vision.
The PA rating system has to take account of how the employee ranks their own performance and an agreed rating established that satisfies all parties. This means individuals need clear targets and standards against which to assess themselves. Here it is pertinent to point out that fewer than half (45 percent) of employees in the Cornerstone OnDemand/Harris 2012 US Employee Report published in December 2011 said their manager's feedback at the annual review was fair and accurate.
Sadly, all too often, managers have no idea how to effectively carry out a performance appraisal meeting or lack the required interpersonal skills to do so. By improving management skills in dealing with interpersonal relations and support organisations could provide an environment more conducive to the development of better and more trusting relationships between managers and staff, and that would lead to much more productive appraisal sessions.
A matter of life and death
As managers we know that employees who have access to training, resources and development opportunities to improve their performance and reach their career goals are happier, more engaged and more empowered to become champions for their company. But employee engagement is not the only end that HR should have in view when they are selling the benefits of an appraisal system. It could be a matter of life and death.
Research conducted by Professor Michael West and Dr Susan Michie examined NHS league tables and concluded that people management, the psychological consequences of well-being for staff and staff experience were 'highly influential in influencing employee health and well-being but also have an effect on individual, group and organisational performance, and thereby patient care and patient outcomes.'
West says "If you have in place HR practices that focus effort and skill; if you develop people's skills; and if you encourage cooperation, collaboration, innovation and synergy in teams; and you do this for most if not all employees in the organization, the whole system functions more effectively and performs better as a result. The effects show across the board, even in measures of performance as fundamental as patient deaths in hospitals".
So a good appraisal system can make a significant impact on the whole organisation. An IES study found employees who had personal development plans, and who received formal performance appraisals in the preceding year, had significantly higher engagement levels than those who did not. CEB Corporate Leadership Council research suggests that interventions that involve measuring results and holding people accountable have less influence that more enabling interventions - the most value adding activities centred around providing employees with specific, tangible answers and assistance to help them with their day to day jobs.
We know that engagement is an important determinant of employee performance and that it positively influences organizational performance, productivity, retention, financial performance and shareholder returns. Promoting employee engagement is an imperative and so it seems reasonable to ensure that managers who must conduct PA sessions with their staff are trained, competent and comfortable to do so in order to achieve optimum results for all parties.
For a performance appraisal system to be really constructive we need to examine our attitudes about employees and what motivates them, sadly many HR professionals and managers feel more comfortable measuring results and questioning accountability.
Michael Moran (pictured) chief executive and Founder 10Eighty
