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What’s Wrong With Performance Appraisals?
Submitted by Leslie Allan on February 16th, 2012
More and more managers are becoming increasingly frustrated with the traditional annual employee appraisal cycle. Managers don’t have time for them, they have a tendency to fray employee-manager relationships and they don’t help the organization reach its strategic objectives. In a recent article on attitudes to performance appraisals, I pointed to evidence that employees, managers and HR folk are rejecting their performance appraisal systems in droves.
What’s wrong with the usual appraisal system? They are designed and rolled out with the best of intentions. How did they get so far off the tracks? Here is my summary of the key reasons most traditional employee performance management systems fail to get and maintain the respect of the people using them.
The usual errors from appraising managers include halo effect, recency bias, contrast effect, and so on. These types of rating errors are now well-researched and documented.
Lack of Feedback
The annual appraisal is sometimes an excuse for giving no meaningful feedback to the employee between appraisal meetings. Or worse still, it is some managers’ normal way of operating.
With no feedback given throughout the year, emotional tension builds like a crescendo. Some managers then use the once-a-year event as a huge mallet with which to bludgeon the employee.
Ignores Systemic Deficiencies
Some 80% of performance shortfalls are due to failures in the organization’s systems and processes. Focusing almost exclusively on individual performance is diverting attention from the real causes of poor performance.
Achieving outcomes is the result of the collaborative interactions of many employees working to a joint purpose. Putting the spotlight on the individual misses the importance of getting team interactions right.
Financial Incentives Distort Performance
Rewarding employees financially often skews behaviors towards non-optimal performance. Dysfunctional behaviors include withholding information, manipulating goals and performance data, starting rumors against peers, and so on.
Financial Incentives Ignite Emotions
Awarding bonuses and the like often takes the primary focus off goals and behavior and puts it onto status symbols, such as salary and perks, that generate high emotions.
Financial Incentives Generate Complacency
Giving monetary rewards often leads to an expectation that next year’s reward will at least match this year’s. This year’s bonus can become next year’s entitlement.
In a future post, I will outline what I think an effective performance management system looks like. What other problems have you experienced plaguing the traditional performance appraisal? What did you or your organization do to fix the problems? Please share your stories here.
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