Performance without Appraisal Part I

At the start of my talk, Performance without Appraisals at Agile2009, I asked the people there how many worked for companies that had some form of annual performance appraisal with ratings or rankings. All but a couple of people raised their hands.

So I asked what the goals of the appraisal systems were. I got the typical answers: improve individual performance, improve organizational results, determine pay.

Then I asked how many were satisfied with the results achieved by performance appraisals relative to those goals. Three or four hands went up. That’s typical, too.

Most companies do some form of annual or semi-annual appraisal with ranking or ratings. If everyone is doing it, it must be a good idea, right? Not so much (see the phenomena of Social Proof). Far from improving results, performance appraisals do enormous harm.

I’ll acknowledge from the start that we in the US are brought up to believe in success through individual effort. Chances are pretty good that some people will find my ideas challenging…though the evidence to support the efficacy of performance evaluations to improve individual or organizational results is slim to none.

(Every time I say this, some one–usually from a company that provides appraisal systems–writes to inform me that performance appraisals and performance management systems work when they are done correctly. Of course, they have to say that. There may be work where performance appraisal makes sense. Knowledge work ain’t it.)

Here’s the first assumption behind performance appraisals:

It is possible (and useful) to discern individual contribution to interdependent work.

Fact:

For most kinds of work there are many, many factors involved in a successful outcome. Measuring one thing (or a handful of things) usually means that other important stuff gets ignored. (See Robert Austin, MMPO).

Stuff that’s easy to count usually doesn’t count–like lines of code, bugs found, seconds spent on a call, etc.

Observed behavior is unreliable in determining contribution. The guy who talks a lot may be adding value to the conversation…or not. The person who sits quietly, apparently staring into space, may be coming up with an important idea. The person who isn’t strong technically may contribute to the team in essential ways that aren’t easily understood by someone outside the team.

You can’t tell who is “working hard” by looking. Last winter I ran a workshop where one of the activities involved designing and delegating a problem for another team to solve.

Team A gave an assignment to Team B, which Team B solved beautifully. A member of Team A complained that Team B were slackers–they hadn’t worked hard, there was no evidence that they struggled to reach a good result.

Bosh. The truth is that a well-functioning team makes solving difficult problems look easy.

When managers do attempt to assess and rank contribution, they are often wrong, and with devastating effect. (Plus, they look foolish.)

The fundamental question is this: are managers more interested in having a team that produces valuable results or in knowing who to praise and who to blame?

None of this implies that managers shouldn’t care about individual skills, and that some people don’t have the necessary skills or desire to do some jobs. But that’s the not the case for the majority. Performance appraisal is a poor tool to deal with exception cases.

More to come.

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