The Performance Appraisal:
Please Let it Die By BRAD FEDERMAN
Performance management officially began in the 1920’s when companies started moving toward mass production. At the time, operational efficiency was the focus. Time and motion studies were deployed and work was dictated by the most efficient method possible.
They changed to frequent conversations and feedback aimed at performance development rather than performance evaluation. These future-focused conversations center on progressing in one’s career and their aspirations.
As the economy moved forward and changed, so did our approach to performance management. In the 1950’s traits such as loyalty became the centerpiece. Personality-based appraisals came into fashion. However, this left a great deal up to subjectivity and overtime the workplace realized it was not connected to productivity or performance.
Cargill Cargill has also decided to abandon annual reviews and ratings and move towards frequent on-the-job conversations. They went even further by rewarding managers for demonstrating good coaching practices, proactively sharing best practices, training people on holding two way conversations, giving feedback and coaching, and an accountability process for practicing the principles needed to make this effort successful. The result: 70% of Cargill employees feel valued because of these conversations.
Performance management continued to evolve. In the 1960’s Management by Objectives (MBO’s) became the popularized approach. Companies were interested in what someone might be capable of in the future and meeting their current objectives. However, there was still a great deal of concern regarding objectivity and fairness, and we saw court cases challenging these systems. All the noise from the current approaches led to change in the 1970’s. Psychometrics and rating scales were thought to be the answer. Forms would make the process more objective. As things progressed, multirater feedback, also known as 360 Feedback, was popularized in the 1980’s. With time, our performance management processes have continued to evolve, but for many the appraisal still lives on. However, a few companies intend to change that. Let’s look at some of those pioneers and where they are taking performance management. Adobe In 2012, Adobe made a strategic direction to abandon the performance appraisal. They studied the time it took to “tick the boxes” and write the narratives. The time it took to go through the appraisal exercise was 80,000 hours -- the equivalent of 40 full time employees! Instead, they decided to replace the appraisal with frequent one-on-one check-ins. Work cycles determine the actual frequency, and ratings are no more. They not only saw an increase in engagement, but voluntary turnover decreased by 30%. Deloitte They scrapped their appraisal process in 2015, a system that took over 2 million hours of work time to complete across the company. They replaced the appraisal with weekly check-ins centered on SMART goals and priorities allowing them to provide timely coaching. These check-ins are supplemented by quarterly meetings reviews focused on the future, not the past. Accenture They decided forced ranking and yearly evaluations were no longer the road to travel down and ditched the traditional ways in 2015. 16
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General Electric They were not only a fan of the traditional appraisal, but the poster child for force ranking. But in 2015 they dumped it into the figurative trash bin. Why? They said the “Rank and Yank” created problems with teamwork and employee engagement, promoted unhealthy competition, and caused burnout. They too have replaced the appraisal with frequent feedback and touchpoint conversations focused on near-term goals supplemented with an end-of-year reflection rather than evaluation. What we are seeing is a shift from an event-based approach to an on-going effort. But this shift is even more profound. We are swinging from a past-referenced approach (what you have done) to a futurereferenced approach (what you can or will do). This change completely alters our thinking and relationships. It means that we are moving from a correction and evaluative mindset to a progress-driven mindset. We are recognizing that performance appraisals attached to compensation have negative consequences. It becomes an exercise of negotiation. The employee is desiring to gain more money and the company wants to stay within a budget. Employees are less likely to have a real conversation because it can hurt their chances for a raise or a bonus, and managers must justify their compensation decisions. It colors the entire conversation. Removing compensation from a direct relationship with the appraisal allows us to drive and promote learning and allow coaching to become the centerpiece of performance management.
Why is this happening? Change. Organizations are experiencing more change than ever and the speed of change has increased as well. To keep up we must be agile. Traditional performance appraisals do not allow for that type of flexibility.
