10 Common Problems With Performance Appraisals

The likes of Accenture and Deloitte are ditching the annual appraisal process in favour of new, shiny performance management and review systems. This happens every so often, and we all know the story: everyone hates appraisals; HR gets all the blame; it’s a bureaucratic nightmare; no-one’s performance actually improves.

But what is the alternative?

Try introducing or defending any appraisals system and one is faced by an army of objectors: passive-aggressive snipers and the openly hostile who try (often successfully) to derail the process.

The reason many people are hostile to new performance review systems is that they fear being “smoked out” by being explicitly compared against objective criteria. For the less successful, the stakes are high and they need to mount a powerful attack.

In my experience, there are ten common objections to the annual performance appraisal process – and ten very powerful rebuttals:

1. Objection: Once-a-year (or even twice) critiquing (at the annual appraisal) encourages people to save up and squirrel away both praise and criticism for months instead of giving it at the appropriate time.
   Rebuttal: This is very rare, and the difference in the appraisal is that it is detailed, numeric, generic and comparative. Day-to-day feedback that is specific and immediate is necessary and the sign of a good manager.
2. Managers are cowardly – they know that low marks are demoralising so they avoid giving them and hence a paper trail of the poor performers suggests they are performing well.
   This is certainly true and perhaps the greatest cause of appraisal system failure. But it can be cured by a mixture of appraiser training and rewards for managers who give honest feedback. Manager pusillanimousness is a human failing not exclusively an appraisal issue.
3. Appraisal confounds different functions: feedback, coaching, development, pay decisions, legal documentation.
   It can, but it need not. It is about detailed feedback. It can be used to generate numbers for pay and promotion decisions but it does not have to. Best to separate pay and appraisal at first so that it is not seen exclusively as a remuneration exercise.
4. Appraisal is evaluation by ambush because employees were encouraged to meet a standard they had not seen, understood or thought relevant to their job.
   This is only the case if appraisal systems are not properly piloted or introduced. In fact the precise opposite is most often the case: people complain about being over-consulted by HR over the contents of the appraisal form with which they are all too familiar.
5. Appraisals are either too inflexible to force real differentiation between individuals on trivial criteria or else so specific that no useful comparative data is generated.
   Certainly the size and complexity of the organisation can make comparisons difficult, but there are two ways around this: first, everyone beyond a certain level (say supervisor) can be evaluated on competencies that are considered to embody the unique and important features of the whole organisation; second, allow unique and shared criteria – the former are called “personal goals” or “key result areas”; the latter compare competencies or management practices.
6. The appraisal system is not organisation-wide; special groups opt out quite unreasonably and unfairly.
   This does happen, paradoxically most often with the top board who are supposed to model and endorse it. Lots of specialists also make a bold attempt to be excluded on the grounds of being unique. But if they are allowed to get away with it, then the performance review system is really not a system for the company.
7. Appraising and giving feedback are skills that needs to be taught before any system is put in place – ie, the system is not supported by training.
   Rebuttal 7: This may be true but does not have to be. Time, effort and money are needed in three phases: system design, implementation and maintenance. Training is part of the latter two where both energy and money are low.
8. The rating scale means the numbers and the words do not match.
   This is an important issue that can be unsolvable. Most rating scales used in appraisal are five-point scales with verbal description. It is a recipe for disaster. It turns into a 3 or 2 point scale that effectively does not differentiate the good and the bad. There are not enough words to adequately describe performance on a differentiating scale. The scales are wide, even and anchored at both ends such as Unacceptable Performance 1 2 3 4 5 6 7 8 9 10 Exceptional Performance.
9. A cost-benefit analysis of designing, implementing and maintain a performance management system implies that, frankly, it isn’t worth it.
   Not all systems require months of super-consultant time and expense but they must not be amateur. Paradoxically, it is the effort put into running and maintaining a system rather than designing it that is most important to ensure its success.
10. Individual appraisal ruins teamwork and team spirit. Traditionally appraisal is done on an individual basis: it's the individual's style, effort and outcome that are appraised not the team that they are in, if indeed they are.
    That need not be the case. It is perfectly simple to institute team assessment and appraisal if that is really wanted.