Appraising Performance: Strategies and Lessons Learned Wendy K. Soo Hoo, Assistant City Auditor City of Seattle November 2004
What the Experts Say About Performance Appraisals
What Do You Think?
Performance Appraisals Versus Performance Management… and Other New Practices
Conducting Effective Meetings About Performance (and Other Difficult Conversations)
What the Experts Say About Performance Appraisals
Performance Appraisal Definition
A PERFORMANCE APPRAISAL IS:
One of those special human encounters where the manager gets no sleep the night before, and the employee gets no sleep the night after.
— Thomas B. Wilson
To create and promote a workforce that can achieve the organization’s mission to provide the most value to its stakeholders
Elements of Traditional Appraisals
Goal Setting —Supervisors set performance objectives or standards for individual employees;
Measures —Tasks or levels of performance are used to gauge whether person has achieved his/her goals;
Feedback —Comparison of performance to goals is usually provided at end of performance period;
Performance Rating —Supervisor judges overall performance and gives numeric rating;
Merit Pay —Pay increase based on performance rating and market price for position.
Performance Appraisals in Your Organization
Are managers in your organization required to conduct performance appraisals?
1 = Yes 2 = No
Do you give performance appraisals, do you receive a performance appraisal, or both?
1 = Give Appraisal 2 = Receive 3 = Both
Appraisal Process Objectives
Managers : Recognize and reward top performers.
Employees : Obtain honest, timely feedback, development and coaching.
Compensation Managers : Ensure that dollars allocated according to performance.
Human Resource Executives : Identify top performers and plan for their development and succession.
What’s Wrong With This Picture?
Managers are usually uncomfortable with appraisal process.
Employees are not happy with the assessment of their performance.
Most organizations (90%) do not consider performance appraisals to be effective.
Appraisal process can effectively serve several functions
One-size-fits-all works well for supervisors and employees
Ratings are motivating
People withhold effort without incentives
Often one function undercuts the other (e.g., employees focus on pay)
Different preferences in coaching, receiving feedback
Ratings don’t provide useful information and can be demoralizing
People are intrinsically motivated to perform well when work is meaningful
Why Appraisal Processes Often Fail
Appraisal process only operates for part of the year—not meaningful if goals are not monitored.
Ratings are based on managers’ opinions, only include what managers remember.
Managers avoid honest feedback to prevent conflict.
Organizations try to meet too many objectives (feedback, development, pay raises, etc.).
Employees believe criteria are vague, subjective; can be demoralized by ratings, especially when pay is involved……
Linking Pay to Appraisals—A Good Idea?
At least two dozen studies over the last three decades conclusively documented that people who expect a reward for completing a task, or for doing that task successfully, simply do not perform as well as those who expect no reward at all.
Rewards or Punishment?
Pay is not a motivator, but it can be a de-motivator when it is inequitable
Rewards can create conflict between managers and staff, or among staff members
Rewards undermine interest because artificial incentive cannot match intrinsic motivation
Merit Pay Increases and Performance Appraisals
Should merit pay increases be included in the performance appraisal process?
If the purpose is to provide feedback, encourage development, probably not .
If the purpose is to reward the individual— maybe .
Merit pay increase should be given when individual shows new capabilities over a sustained period, rather than end-of-the-year appraisal.
Anyone who supervises someone else should:
Look carefully at the assumptions made about motivation.
Assess the degree to which carrot-and-stick assumptions influence own attitudes.
What Do You Think?
On a scale of 1 to 5, what do you think of the performance appraisal process?
1 = Performance appraisals always meet these objectives.
2 = They meet some of these objectives.
3 = They are a necessary evil.
4 = They could/should be improved if we continue to use them.
5 = Performance appraisals should be eliminated altogether.
What Do You Think?
Do appraisals encourage you to work harder?
1 = Yes, I work harder because of the appraisals.
2 = Yes… at least for the the month before or after my appraisal.
3 = No, my effort would have been the same with or without an appraisal.
4 = No, I find performance appraisals discouraging and ineffective, which impacts my work effort.
So What Do We Do Instead? Performance Management and Other New Practices
Typical Process Ideal Process
Unilateral (only from the manager’s perspective)
Little focus on future capacity
Uncertain link to business success drivers
Mutually understood, with multilateral communication
Strong development focus
Grounded in business success drivers
S pecific—Goals and criteria should be clearly defined;
M eaningful—Evaluation process should impact behavior;
A chievable—Goals should be realistic; process should provide incentive to perform beyond expectations;
R eliable—Process should achieve desired objectives;
T imely—Performance reviews and feedback should occur more frequently than once each year.
Performance management is the process of creating a work environment in which people are enabled to perform to best of their abilities.
Begins when a job is defined and ends when the employee leaves your organization.
Performance Management at the Organization Level
Clearly define and communicate the organization’s mission, strategies, and performance goals.
Provide appropriate training for managers on giving feedback.
Ensure employees receive ongoing feedback and appropriate training.
Align job descriptions with organizational goals.
Conduct exit interviews to understand why valued employees leave the organization.
Performance Management at the Manager Level
Involve employees in goal-setting process; goals should be flexible enough to reflect changing workplace conditions.
Clearly articulate performance metrics used to measure employee’s success in meeting agreed-upon goals.
Provide training to employees to strengthen performance and advance career.
Provide ongoing “on the job” feedback.
Performance Management at the Employee Level
Develop performance goals with his/her manager.
View manager as a coach or mentor rather than someone who passes judgment.
Be receptive to feedback.
Don’t rely on manager to provide all the feedback—employee is also responsible for providing information on his/her performance.
Other New Approaches
Evaluations in new systems are not conducted for raises, promotions, or bonuses—instead for development and communication.
Most important aspect in all is multilateral communication between employee, managers, and others, rather than one-way communication.
Pass/fail systems or no ratings at all
Owning the Solution
If people do not participate in and “own” the solution to the problems or agree to the decision, implementation will be halfhearted at best, probably misunderstood, and more likely than not fail.
— Michael Doyle in forward to Kaner, Sam Facilitator’s Guide to Participatory Decision Making New Society Publishers, Gabriola Island, BC 1996
Recapping the Key Points
Expectations should be linked to business objectives;
Performance goals should be established;
People should be coached, mentored—employees should be motivated; and
Assessments relying solely on supervisor’s perspective will have limited value.
Are You Using Any New Techniques?
1 = Yes, and it’s more effective than the traditional appraisal process.
2 = Yes, we’re still evaluating the effectiveness.
3 = Not yet, but we’re thinking about it…
4 = No, we’ll probably always use the traditional appraisal process.
Dealing With Difficult Conversations
Four Stages of Difficult Conversations
Explore their story, then yours
Collaborate on resolution
Stage 1: Prepare
Consider your objectives and approach
Conduct research—if you’re the manager, review the employee’s file, outline some topics and talking points, do a mental walk-through.
Employee should consider their performance as well and prepare notes or jot down concerns and questions.
Be open to multiple perspectives
Adopt a positive mindset (see next slide)
Choose a Positive Context
When a conflict is framed in a negative context, the focus is on power, and will likely result in a winner and a loser.
Focusing on improvements instead of mistakes can defuse the tension.
Stage 2: Initiate Conversation
Invite conversation and share your purpose
Key practice : describe the issue/problem as a difference in perspective
Avoid problem solving during initial stage of conversation
Acknowledge feelings, which are frequently core issues, before attempting to solve stated problems
Stage 3: Get Their Story-- Then Tell Them Yours
Start with their story
Don’t assume that you know their story
Don’t push back—Listening does not imply agreement
Express your views and feelings after their story is finished
Start with the most important points
State what you mean clearly to avoid assumptions
Share how you formed conclusions
Avoid words like “never” or “always” or “fault”
Present your story as “your truth” not “the truth”
Stage 4: Collaborate on Resolution
Invite the other person to help identify solutions
Invite the other person to come back if attempted resolution is not successful
Remain hopeful that mutually acceptable solution is possible
Recap major points, be sure to end on encouraging note
Wilson, Thomas B. Innovative Reward Systems For the Changing Workplace , McGraw-Hill, New York 1994.
Flannery, Thomas P., et. al., People, Performance, and Pay , The Free Press, New York 1996.
Various articles published on human resource websites