CEO Chronicles # 39 : Performance Appraisal - Panacea Or Poison?

“You Can Do Better. Much Better.”

“Mom! I scored 95% in Math!” I cried, excited.

“Good, well done,” my mother said, “but why did you not get 100%? You can do better, much better!”

My head and spirits fell.

This happened every time! However well I did, I was told that I could do better. How much ever I achieved, I was told I could achieve more. It was never enough!

It was frustrating. And it was demotivating. Most of all, it was hurting.

Many years later, my mother and I had a chat about this.

She was genuinely surprised.

“I only wanted what is best for you, my son,” she said. “I wanted you to know that you could achieve what you set out to do, and that there were no limits.”

“It was never my intention to hurt you or demotivate you,” she continued, an apology in her eyes.

I understood. I knew where she was coming from.

Just the previous week, my son came to me and said, “Daddy, I have completed the Lego model – see, here it is!

And I said, “Oh, it looks great, my son! But, what about this section – it seems a little misaligned. You can do better, much better!”

Appraisal Is A Double-Edged Sword

What exactly is appraisal or feedback?

This term is used to describe the evaluation or criticism about a person’s or entity’s actions or behaviours. The objective of this evaluation is that they can use that information to adjust and improve current and future actions and behaviours.

Feedback occurs when an environment reacts to an action or behavior.

‘Customer feedback’ is the buyers’ reaction to a company’s products, services, or policies.

‘Performance appraisal’ is the manager’s or peer’s reaction to an employee’s performance and behaviour.

In both cases, the exchange of information involves both performance exhibited and performance expected.

The Pros

There is no question that, in theory, feedback is a good thing.

Individuals, teams, business units, companies, governments - all can benefit from appraisal.

Myriad studies have proven that feedback helps to improve and enhance; contributes to better informed decisions; lays the foundation for continuous dialogue.

Effective feedback, in theory, has benefits for the giver, the receiver, and the wider organization.

And The Cons

In practice, the appraisal process can be and usually is demotivating and hurting.

In most organizations, feedback creates an atmosphere of fear. More than 85% of employees say that receiving feedback is a negative experience.

Also, feedback is victim to natural biases and errors.

It can lead to a stressful workplace, unhappy relationships, and fear and toxicity within teams.

Sadly, what is supposedly Panacea in theory, turns out to be Poison in practice…

Feedback, Feedback Everywhere!

In reality, whether we like it or not, feedback is around us everywhere.

We judge and are being judged all the time.

At home, at work, with friends, by colleagues, online and offline.

“Oh, look at Roger, what kind of shirt is he wearing? He must be colour-blind!”

“I wish Sheila would complete her tasks on time; she is always late!”

“Can’t Peter check his e-mails before sending? So many mistakes, every time!”

A lot of feedback is covert. Much of feedback is indirect. Often, issues are largely hinted at rather than expressed.

And therein lies the problem.

We need to be able to crystallize these judgements. To convert them into a form that can be heard, understood and responded to, openly and transparently.

So, the corporate world adopted the concept of Performance Appraisal. So that feedback is given and received, documented and reviewed, with the hope that employees will use this to enhance their behaviour and performance.

My Appraisal Is Your Criticism

Sadly, performance appraisals traditionally carried out annually are useless. They suffer from too many problems–

• Most managers are untrained in evaluation
• Appraisals are rarely based on hard, objective data – they are mostly subjective
• They are infrequent, with huge gaps in between appraisals, leading to errors of recency and central tendency
• Appraisals try to tick off too many boxes – improvement, development, promotion, bonus, retention – at one time
• Appraisals are seen to fuel greed and unhealthy competition

Research shows that these problems lead to an unusual outcome -

Appraisals actually worsen employee performance in 40% of cases!

Over the past few years, organizations have become increasingly aware that the annual performance appraisal is a fundamentally broken process that is irrelevant to and ineffective for the modern workforce.

Exiting The Spiral

“So how do we make feedback deliver positive outcomes?” I asked my mentor.

“There are three rules I have always followed,” she replied.

“One, make the feedback process continuous.”

“Two, make the process about motivation, not measurement.”

“Three, use the process to align, coach and develop, rather than evaluate. Prepare them for the future, rather than going over their past.”

“The very first time I implemented this, I carried out a survey with my team. These were the outcomes :”

• the reviews were more objective and fairer
• they were of the right quality and timeliness
• the reviews actually helped improve their performance.

“Most importantly, my employee retention numbers shot up by almost 12%, thus increasing organizational stability and recruitment costs.”

“So, what were the steps you took to implement this new approach?” I asked, fascinated.

Poison To Panacea

“First, I made goal setting a quarterly process,” said my mentor. “Most people cannot envision something 9-10 months away. By focusing them on the quarter ahead, we made things more real and immediate.”

“Secondly, I coached my managers to focus performance-related conversations on future growth and development, rather than looking backwards at quotas and deadlines. By doing this, we reduced tension and anxiety, and people became much more open to the feedback.”

“Third, I established a Weekly Review template for each employee, that they would full-up and share with their manager, so as to ensure that tracking is continuous, rather than sporadic. So, every month, and then, every quarter, the manager and the employee could review the behaviour and performance across the whole period, and plan how to do better.”

“Finally, I used technology to make this happen. Paper-based systems are cumbersome and difficult. The moment I digitized the system, it started working like clockwork. HR did not have to chase after people. The system’s reminders and flags were enough to keep the discipline.”

“How long did this take?” I asked.

“Oh, it did not happen overnight!” she replied. “As always, there was resistance in the beginning, and excuses and delays. But, within 3 months the foundation was laid; within 6 months, we were fully switched over.”

“That must have taken a lot of hard work!” I exclaimed.

“Yes, Shesh, but not only did this change the atmosphere and level of trust in the company,” said my mentor, “it led to much better performance!”

“We started winning more deals, our margins improved, our customer satisfaction numbers rose.”

“Even McKinsey’s research has shown clearly that organizations that have a continuous performance appraisal system in place are three times as likely to outperform the competition.”

“Wow!” I exclaimed, “that is news to me!”

“Well,” she smiled wryly, “all of us managers say people are our most important asset, but we rarely behave like we mean it. The fact is that if you build the right ecosystem that motivates and engages your people, they will create miracles you never dreamt of!”

“Amen to that!” I said.

Focus On The Appraiser, Not The Appraisal

The best managers in the world are effective coaches.

They constantly create moments where genuine dialogue can occur, where employees feel their valued and cared for.

The best performance appraisal approaches in the world are those:

• That encourage continuous conversations that engage and encourage employees.
• That offer tools and metrics that help motivate and develop.
• That help prepare for the future, rather than conduct post mortems of the past.

The ideal performance management system is a manager who cares for his team.

****

Do send your inputs to me, either as a comment or as a PM.

Cheers | Shesh | Singapore | 03 November 2020.

Post Script :

1. For other interesting CEO Chronicles click here.
2. Follow me so that you don’t miss the next issue of CEO Chronicles.

#BillionDollarLearnings #radicaladvice #ceochronicles #purpose #mentoring #careers #career #careeradvice #careerguidance #bestadvice #personaldevelopment