The End of the Performance Review

A New Approach to Appraising Employee Performance

T. Baker

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137347503
• Topic: Business
• Subtopic: Gestione
• Index: Business

Athoroughly tested, distinctive alternative to the appraisal process that draws on well-established principles of organizational behavior. Based aroundTim Baker's '5 Conversations' approach, and with a timely focus on fostering innovation, this book is practical and easy to use – featuring case studies, interviews and useful templates.

chapter 1

Abolishing the Standard Performance Review

It’s 9 am on Monday and Bob is sitting across the desk from Terry in Terry’s large office; the early morning sun is streaming through the half-closed louvers and casting some shadows across Terry’s big, black shiny desk. It’s annual performance review time and everyone is on their best behavior. There is a degree of tension and apprehension around the office. Sitting in the chair opposite Terry, Bob looks as though he is sitting in an airport lounge, having just been told that his flight has been delayed an hour and it’s already 10.30 at night.

Terry—Bob’s boss—isn‘t feeling his best either. He is a little apprehensive about appraising Bob’s performance. As Terry is reading through Bob’s self-appraisal behind his large, imposing desk, Bob sits with a look of disinterest on his face, chewing a piece of gum, arms folded and staring straight ahead into the distance.

With some variation this familiar scene is being played out in almost every office, production area, and worksite all over the world.

So familiar are we with this scene, the UK BBC sitcom The Office has a hilarious parody on the annual appraisal. The skit shows ‘David’ conducting the annual performance appraisal on ‘Keith’ in David’s office. This particular scene is readily available through YouTube; check it out if you have not already seen it, it is very funny. Like most good comedy, it has more than a glimmer of truth to it.

In that skit, David struggles his way through myriad paperwork. Keith is completely detached, arms folded, deadpan expression, and less than helpful on the other side of the desk. David asks Keith why he has not filled in his self-appraisal form, and Keith responds by saying he thought David was suppose to fill this in as his boss. It goes downhill from there.

In obvious frustration David moves on to the ‘Q and A’ section of the appraisal paperwork. Again this is not filled out. David uses this as an opportunity to ‘engage’ with Keith. ‘To what extent have you been trained to use the computer effectively?’ David reads from the forms, without making eye contact. With no reply from Keith, David reads out the suite of options: ‘One, not at all; two, to some extent; three, reasonably competent; four, competent; five, very competent; or don’t know.’ ‘Don’t know,’ comes the unconsidered reply from Keith, still staring into space.

Plowing on, ‘To what extent do you feel you are given the freedom and support to accomplish your goals?’ ‘What are the options again?’ asks Keith. ‘Always the same. One, not at all; two, to some extent; three, reasonably competent; four, competent; five, very competent; or don’t know.’ ‘Don’t know’ comes the humdrum reply from Keith again. And on it goes in the same non-communicative pattern.

In the end David challenges Keith by asking, ‘If “don’t know” wasn’t an option, what would you put?’ To which Keith replies, ‘What was the question again?’

Somewhat exaggerated perhaps, but nevertheless this is the kind of disengagement that happens in all types of industries for a high percentage of employees and managers once or twice a year.

I am sure you have your own war stories, either as someone like David conducting the appraisal or like Keith, the person on the receiving end of the appraisal, or both.

When something as serious as a performance review becomes satire, then perhaps it is time for a re-think about this long-standing organizational ritual. And when that sitcom scene becomes one of the most popular downloads on YouTube, you know that it is definitely time to take stock and re-evaluate the appraisal.

When I mention the term performance appraisal or performance review, what comes immediately to your mind? Of course, I don’t know what you thought, but I am pretty confident that the thoughts you had were not favorable.

By the way, I will use the terms appraisal and review interchangeably throughout the book.

As you are probably painfully aware, performance appraisals typically come around once or twice a year and they are usually not something that everyone looks forward to. I have spoken to lots of people in organizations over the past decade, and the vast majority of people are not really excited about the traditional appraisal interview. In fact many people actually dread them. Yet, psychologists tell us feedback is important. We all need feedback, they say; we need to know where we stand.

Whether you coordinate the appraisal system, are a manager who conducts the appraisals, or are an employee on the receiving end of an appraisal, you probably have some reservations about the standardized process. Why? Is it the formality associated with the appraisal? Is it the paperwork? Is it the unexpected or unknown? Is it the apprehension of not getting or giving a pay rise? Is it giving or receiving criticism? It could be all these things and more.

Of course, not everyone faces the performance appraisal interview with trepidation. Some enjoy it and even look forward to it. But they are likely to be in the minority. The majority of people find the whole experience unproductive and stressful. Specifically, the idea of preparing to appraise someone’s work performance or being on the receiving end of an appraisal is not everyone’s idea of fun.

If that’s the experience of most people, we have to ask the question: Is it worth it?

Performance appraisals originated from the military

The traditional performance appraisal system is based on the military model. Like many things in the military, the performance appraisal has been adopted in modern organizations. In the old military environment, the superior gives the subordinate a one-way monologue on what they are doing wrong and occasionally what the subordinate is doing right. The recipient is usually a passive and unenthusiastic receiver. This traditional model is based on a power relationship.

What the boss thinks, irrespective of whether he or she is right or wrong, carries greater weight than the recipient’s opinion. The appraiser has power over the person being appraised. What the boss thinks is more important than what the subordinate thinks. They are in control and the subordinate is dancing to the tune of the appraiser. It is not a constructive dynamic to discuss developmental and performance issues. Like most things military, the performance appraisal system has been modified for industry to some extent, but the modification does not go far enough.

there is still an imbalance of power

For instance, the power imbalance has been somewhat equalized in the civilian (and military) workplace. Employees are now asked to rate themselves and discuss their own perspectives about their performance across several criteria. Good managers try not to do too much talking and attempt to adhere to the rule of doing no more than 50 per cent of the talking, encouraging the employee to talk by asking open-ended questions. A skilled manager, though, uses questions in an attempt to draw out the quiet employee. With verbose employees, these skilled managers attempt to summarize the key points made and move the conversation on.

Irrespective of the skill of the manager, these meetings are still controlled by the manager. His or her opinion generally carries more weight and the conversation is based on discussing the observations the manager has made of the employee. So, in reality, there is still an imbalance in power. This power dynamic is based on the potentially flawed assumption that managers know best: sometimes they do and sometimes they don’t.

The problem with the traditional approach

There are several inherent problems with this conventional appraisal system. I know this after interviewing 1200 managers and HR professionals over the past few years across all industries. I simply asked them to identify any shortcomings the standard performance appraisal system has. Responses varied, but essentially I identified eight themes from my research. The eight shortcomings are:

Appraisals are a costly exercise.

Appraisals can be destructive.

Appraisals are often a monologue rather than a dialogue.

The formality of the appraisal stifles discussion.

Appraisals are too infrequent.

Appraisals are an exercise in form-filling.

Appraisals are rarely followed up.

Most people find appraisals stressful.

We shall look at these deficiencies of the standard performance appraisal system in more detail in this chapter before looking at the alternative approach I am proposing in the next chapter.

Appraisals are a costly exercise

I think in many cases, the traditional approach of appraising performance is a waste of time and can even cause more harm than good. It consumes enormous amounts of time with arguably little return.

Consider this: An SME of 100 employees would devote approximately 200 hours—if done twice a year—to the interviews alone (assuming the meetings each last one hour). If you consider that two people are in these interviews, that is 400 hours of time taken up in face-to-face meetings that could be spent on other work-related activities. This does not take into account the time the manager and employee take to prepare for these interviews. Let us assume that the managers and the employees take 30 minutes each to prepare for the interviews on average. That amounts to another hour per appraisal. With 200 appraisals that is another 200 hours. We are now up to 600 hours a year. While the manager and employee are spending time preparing for and conducting their interviews they are neglecting their core duties. Accountants refer to this as an ‘opportunity cost.’ In this example, that amounts to another 600 hours of time. So we are now consuming 1200 hours of time on this appraisal exercise. Working on a standard eight-hour working day, this means that approximately 150 person days are devoted to the exercise of appraising performance in an organization of 100 people. In dollar terms, and based upon an aggregate $65,000 wage, the average employee receives approximately $178 a day. $178 by 150 days equals $26,700.

This figure, of course, is not listed in the profit and loss statement. But imagine if you were a manager and noted a line item in the expenses column of $26,700 with no explanation next to it. This is a fairly conservative figure and it is more likely to be higher than this, particularly for a larger business. At any rate, would you not query this and ask: What was this expense item? And what return did the organization get for $26,700?

Other questions you may rightly ask are: Are we getting value for money from this exercise? Or could we spend this time and money doing something else? I think it is time we questioned this ‘investment’ in time. Is there a better way? For instance, if this SME devoted 150 days to directly improving its business processes and systems, would that make more of a difference? Or, what about devoting 150 days to improving the quality of service to customers? Would 150 days ‘working on the business’ instead of ‘in the business’ make a discernible difference in performance? You may argue that appraising people’s performance is in fact working on the business. But does it generate significant value?

The formal appraisal system is time-consuming and therefore costly. It is questionable whether it is worth the time, effort, and cost. Could that time be better spent elsewhere in the business? According to many managers I speak to, the answer is yes. So why do we do it?

I think the main reason we go through this performance appraisal ritual once or twice a year is that it provides the organization with a legally defensible position. In other words, if and when an employee is not performing on the job, the organization has documentary ‘evidence.’ The written records provide substantiation that the poor-performing employee is not meeting standards expected of them. Courts of law and lawyers love written documents and what better way of providing that evidence than through a written appraisal signed by both the manager and the employee?

But the reality is that it is not totally legally defensible since underperforming employees are expected to be given an opportunity to ‘lift their game.’ Consequently the appraisal needs to be followed up with a performance plan. In other words, there ought to be tangible evidence that the employee was given a fair and reasonable opportunity to enhance his or her performance before they are dismissed. That necessitates a process of consistent and persistent feedback.

Appraisals can be destructive

Aside from the issue of cost, many managers I speak to tell me that performance appraisals can cause more harm than good. Consider a typical example: A manager neglects to give any feedback to a staff member throughout the year. Come appraisal time, the manager—through necessity—lets his or her staff member know that they are not happy with a particular aspect of their performance. Perhaps they do this in a tactless, destructive way rather than in a tactful, constructive way. The employee is naturally blind-sided and offended by what they perceive to be unwarranted criticism and a personal attack. They were not expecting this criticism and did not appreciate the way it was delivered. The recipient is unpleasantly surprised, is intimidated, or reacts negatively to what they think is unfair criticism of their work. This scenario is not uncommon.

At the same time, the manager giving this unwelcome appraisal gets frustrated and annoyed with the employee because they will not contribute to the ‘discussion.’ The offended employee clams up. Or perhaps they lash out at the manager. Either way, this exchange in these circumstances is likely to be unhelpful and potentially detrimental. The manager cannot understand why the employee ‘doesn’t get it’ and is seemingly unaware of his or her shortcomings. On the other hand, the employee is angry that they have never heard this criticism before. Distrust sets in and their working relationship is temporarily or even permanently damaged. I observed such a situation recently. A manager was concerned about one of his colleagues and his capacity to write clear, concise, and mistake-free reports. This manager had never given this feedback directly to his staff member. But during their appraisal interview, the manager did mention it and his concerns about the team member’s report-writing abilities. Apart from not giving this negative feedback before the i...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• Foreword
• Acknowledgments
• Introduction
• 1 Abolishing the Standard Performance Review
• 2 The Five Conversations Framework
• 3 The Climate Review Conversation
• 4 Moving from Job Focus to Performance Focus
• 5 Bye-bye Job Descriptions
• 6 The Strengths and Talents Conversation
• 7 The Opportunities for Growth Conversation
• 8 The Learning and Development Conversation
• 9 The Innovation and Continuous Improvement Conversation
• 10 Implementing the Five Conversations Framework
• 11 The Final Conversation
• Appendix: Templates for the Five Conversations
• References
• Index