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Leaders Don't Appraise People By Ed Yager For most managers the concept of appraising the performance of employees makes simple sense. It goes without saying right? Everyone needs a regular appraisal. They always hate to write them - almost as much as they hate to give them, but no place near as much as employees hate receiving them. A major movement in management toward the use of measurement in performance management has done little more than to make matters worse. W.W. Scherkenback, the master of world class, writing as the Corporate Director of Quality at Ford Motor Company addressed the question of performance appraisal. I too have had the opportunity to study the practice of evaluation frequently in my consulting on the design and implementation of appraisal systems and the combined thinking follows. Why traditional performance appraisals do not work First, they destroy team work. This was W. Edward Deming's primary concern when he identified the use of performance appraisals as one of his five greatest management diseases. When push comes to shove, because American businesses are organized functionally, success is dictated by my meeting my objectives - not yours, on my making my numbers, never on my giving something back in order to achieve a balance for the good of the organization. Second, they reduce initiative and risk taking. Playing it safe, setting low and assured objectives, is the more common practice. Third, appraisals do not distinguish between the people and the system. It is hard for people to be held responsible for results when everyone knows those results evolve from several factors in the system. People often feel victims of the system. Results may be achieved in spite of the system. Is this good or bad? Outcomes may emerge that are no fault of their own. Performance is not only impacted by the system, but by the supervisor as well. We all know if you want to change the team start by changing the coach. Yet we create systems which gives those very coaches, good and bad alike, the power to evaluate others, and in many cases to make decisions which can impact a person's life-long career. Fourth, they increase the variability of performance. The evaluation process attempts to plot performance levels along a continuum, using such labels as outstanding, excellent, good, average, or poor., The assumption is that management really knows where people stand, and they will reward those whose performance is "above average". The difficulty of making such determinations is proven by the fact that 80% of employees are rated "excellent" (unless the "system" at its evil best forces the distribution of ratings). In fact, real differences are not discernible. The result is greater variability in behavior as people react to different signals. You can't compete in world markets with systems that generate paranoia. What would a better performance appraisal system look like? Is there a system that would inspire continuous improvement of product or service, nurture and sustain employee contributions, and build a company team culture? Will it recognize that people are the company's most important resource and contribute to the motivation of all employees through counseling, coaching, honest communication, enhancement of skills? The folks at Sento, located in Utah County understand. Their most senior HR training officer carries the title of Chief Morale Officer. His or her responsibility is just what I have described plus initiating programs and systems for ensuring retention, and employee upgrades. Their <30% turnover, when compared in an industry where 200-300% turnover is common speaks for itself. (Of course doubling business each year speaks well of their efforts as well.) This is the system Ford Motor has developed. If managers do their job of selecting, training, leading, and developing, their people will perform "within the system". The rater then has just three choices. People are operating within, above, or below the system. A part of this process is the acknowledgement on the part of leaders that when operating in an atmosphere of mutual trust, all of those carefully hired employees will take initiative, identify problems, and contribute to solutions. On the other hand, in an atmosphere of fear, people do not feel free to make recommendations. I recently discovered a disconcerting growth in the practice of fear spread by the teaching of one or more prominent "consultants" in the area. They are recommending a practice of continually excising the bottom 10% of the work force. Understand, I am all in favor of stepping up to performance problems, and too many coaches and managers fail to do so. But to systematically terminate people, as if the outcome will be a continually better total work force is ridiculous. Three elements of the corporate system which work against improving performance are these. Eliminate these from any performance evaluation/management system you purpose. 1.) Daily production reports which place an undue emphasis on quality or speed of service rather than on quality, harmony, effort, and sacrifice. 2.) Financial management systems that focus on short term numbers or budgets. Typically financial systems are too restrictive. They are not flexible enough to permit a focus on the judicious use of or improvement in resources. Traditional financial systems require that budgets must be spent, but not over spent - often on a line item basis. They have no provision for valuing intellectual capital or talent. This practice is growing, but very slowly. 3.) Human resource programs that fail to build trust. There is too much emphasis on compliance and administration. Productivity in too many H.R. systems means people are working themselves out of a job. In high trust systems which encourage employee involvement and participation, people know they may work themselves out of an assignment, but not out of employment. There is much more value in building performance improvement systems on trust, mentoring, coaching, and real performance improvement. There should be a real time, self scoring mechanism in which the employee receives the feedback data and adjusts accordingly rather than waiting for an appraisal. Replace appraisal systems built on fear and on the equitable distribution of jelly beans (as in "jumping for") rather than for meaningful performance initiatives with processes that grow people and talent. Certainly there are some cases where legal considerations require the documentation of poor performance. So be it. Call it "managing for improvement" and administer that program fairly. You do not need to "appraise" everyone. Every manager ought to invest whatever time it takes to search this out. |
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