Traditional performance evaluations do more harm than good.
From the first comprehensive indictment of traditional employee performance evaluations written in 1965 in the Harvard Business Review to current articles, research, and surveys done by The Wall Street Journal, Gallup, etc., the overwhelming consensus is that traditional performance reviews do more harm than good.
Here is a sampling of some of the evidence to support the fact that traditional performance appraisals are counterproductive:
- A survey by the Society for Human Resource Management (SHRM) found that 90% of appraisal systems were not successful.
- The Wall Street Journal noted that 90% of managers describe performance appraisals as “unsuccessful.” The paper went on to say, “If less than 10% of your customers judged a product effective and 7 out of 10 said they were more confused than enlightened by it, would you drop the product?”
- The Michigan Bar Association noted that only 3% of lawyers felt that an appraisal benefited a company in litigation, while 44% felt the appraisal benefited the employee.
When we speak about traditional performance evaluations, we are referring to:
- A 5-point or 10-point rating form with or without descriptive comments for each rating level.
- A listing of vague and poorly defined performance attributes such as dependability, reliability, flexibility, creativity, etc.
- An annual or semi-annual, one-way interaction in which the manager gives his/her opinions about an employee’s performance with limited or no evidentiary support.
From our perspective, 5-point or 10-point rating schemes for performance are of little or no value. Managers do not have the ability to accurately and consistently rate performance on an arbitrary 5-point or 10-point scale.
It is our position that performance has only 3 measurements:
- Falls Below Standard,
- Meets Standard, or
- Exceeds Standard.
In the evaluation of any performance, a manager is limited to the choice of two measurement methods:
- Counting – Making observations and actually counting results, as well as noting exception reports.
- Judging – The process of forming an opinion by discerning (rating) and comparing (ranking), rather than counting.
The problem with traditional performance appraisals is that they utilize the judging measurement method in which managers are expressing opinions about performance, rather than stating facts.
The subjective process of forming an opinion about an employee’s performance is what has given rise to the famous Dilbert cartoon in which the employee states to his manager, “I don’t have an attitude problem. You have a perception problem.”
Unfortunately, traditional performance reviews are largely perception, with a whole bunch of “likability” factors thrown in to “muddy” the rating.
Our Performance Evaluation Program was modeled after Continuous Improvement (CI) programs that are being utilized by thousands of organizations.
When one looks at the results of CI programs in companies, the outcomes are impressive (e.g., a doubling of productivity/throughput; cycle times and inventory slashed by 50%; workforce reductions of 20% to 50% from attrition, not layoffs; elimination of unnecessary process steps and quality improvements; etc.).
An Employee Performance Evaluation has the potential to achieve results on an individual level, proportional to the business CI outcomes listed above.
The major advantages of our Performance Evaluation Program are:
- It is simple to use and understand with only 3 measures of performance.
- It uses counting, rather than judging, as the measurement method.
- It is not a generic form for all positions – it is specific to each job.
- It analyzes and improves workflow and productivity.
- It actually evaluates performance, not personality.
- It is based on observable activities and behaviors.
- It improves performance and business results.
- It delivers results, not bureaucracy.
- It eliminates all the fuzzy language and cryptic words of traditional forms.
- It allows an employee to fully participate in improving the duties and activities that he/she is responsible for implementing.
- It focuses on strengths and mutual decision making, rather than weaknesses and manager directives.
- The specificity that is built into the Program makes the evaluations 100% objective, rather than subjective.