, , , , , ,

Famed business journalist Walter Kiechel III wrote in an article on performance appraisals nearly 25 years ago: “Let’s be frank: Most managers hate conducting performance appraisals.  If they think they can get away with it, they will skip such potential unpleasantness entirely.”  Kiechel goes on to state some reasons managers often cite for approaching appraisals with such dread, including that they take too much time, the appraisal form is bad, managers don’t receive appraisals from their bosses, and the process is too painful.

In my opinion, not much has changed in the 25 years since Kiechel penned those words.  Managers still approach the performance appraisal process as a dreaded chore, which results in poor planning and execution, and partly explains why appraisals often fail as an effective performance management tool.

Here’s what often happens.  Throughout the year, most employees work hard to complete their work assignments and meet their goals.  Most of them do a fine job.  Unfortunately, their efforts go largely unnoticed and undocumented.  Employees who have stellar performance or those who are big screw-ups get the appropriate attention from management.  The middle-of-the-road employees, the “stalwarts,” as Harvard Business School Professor Thomas DeLong calls them, barely register on management’s performance radar.  When performance appraisal time rolls around, all the manager knows is that the employee must have done a good job, or else he would have noticed and taken action.  So, the manager stares blankly at the performance appraisal instrument and doesn’t know what to write or where to begin.  And, instead of asking the employee to do a self-appraisal or otherwise to provide information on his accomplishments, he wings it.  The resulting appraisal bears little resemblance to the employee’s actual performance, and the ratings and comments seem arbitrary to the employee.  Employees quickly learn that better performance does not necessarily translate into higher scores or bigger raises, and the value of the performance appraisal process as a performance management tool is diminished.

Here’s what should happen instead.  The annual performance appraisal should be a part of a year-long performance management cycle that begins with setting performance goals jointly with the employee.   Throughout the year, managers and employees should track and monitor goals – realigning them as necessary — and performance, whether good, bad, or indifferent, should be well documented.  Managers should give employees regular feedback and coach them to higher levels of performance.  Managers should have informal performance review updates with their employees at least quarterly to gauge performance levels and do any needed course corrections.   Managers then use their notes from previous performance discussions and quarterly reviews to complete the appraisal document.  If the performance appraisal tool is used as a guide for effective performance management throughout the year, then actually completing the appraisal document at year-end would be virtually effortless, and the outcome would be more meaningful.  Employees will more readily see how their performance is tied to their performance ratings, and what additional effort is required to improve their scores.

Granted, the performance appraisal process is imperfect.  It is a highly subjective process that masquerades as an objective measure of performance and success.  There is much literature advocating for the abolishment of such systems altogether.  Perhaps it would be better to have no performance appraisal system at all than to have one that is a total sham.  Most performance appraisal systems, as imperfect as they are, can be improved by embracing them as a comprehensive performance management tool rather than treating them as an annual event.  Despite the flaws, a performance management process that includes all of the components of an effective system can be a useful tool for managers and employees.