Through the years, I have had several conversations with managers and leaders and HR folks who have said: The performance appraisal system CAN work. It worked in _________ situation or with ________manager.
Here´s the thing. Excellence or luck can make any system, program, or process, look like it is working. Some people who smoke 2 packs a day live to be 100.
A great manager or leader might actually find that their performance appraisals are not a drudgery and their people do not dread them. But here is the point – that´s not because of the system, it is because the leader or manager has created an environment where open and trusting conversations happen as a matter of course. In this case, having to go through the appraisal may not feel much different than most other conversations (it likely will be different if pay is linked into the process).
- We don´t build cars for the highway that only the best racecar drivers can maneuver.
- We don´t write novels for the general public that only Nobel Prize winners can understand.
- We don´t create training classes that only 1 student in 20 can apply.
And we should not employ performance appraisal systems that only the BEST managers and leader can make worthwhile.
I have heard another argument for appraisals. Big companies like Intel and GE have very regimented processes. I worked for Intel, so I will speak to their system. Some managers have told me they think the "focal"?? process (their name for the review system) works and improves performance. But let´s look a little deeper. Intel has what I would call a very results oriented culture. From the time you enter new employee orientation, you are taught their language of how goals and requests are tracked. Everyone is held accountable. At every meeting, they assign ARs (Action Required). People own ARs and are expected to deliver. Intel also uses regular one-on-one meetings between managers and team members to ensure that goals are clear and they agree to action and development plans. The focal process takes a lot of time and further cements the accountability and goal oriented-ness of the culture (but it also has many other, less constructive affects). And that´s where I think the answer lies. The entire Intel culture is set up to communicate and reinforce goals and actions – the performance appraisal system, for the amount of effort it takes, does not make the difference. There is some ranking going on with their process and this does not improve performance (and it causes lots of anxiety, I can assure you).
Sometimes the culture of the organization is really more impactful than the costly and dreaded appraisal system.
For the vast majority of companies (I say vast majority because I was taught not to write in absolutes, but I want to say for all companies), the appraisal process causes damage.
I worked for one company that was not very diligent about the frequency of their appraisals. They had a 6 month review cycle, which means that, in theory, everyone should have had a review every 6 months. Some people did not get reviews for 18 months, some every 6 months. Whether you had a review or not did not affect performance. Personally, I was thrilled when I got away with not getting or giving a review for a while.