Don’t (automatically) blame the performance appraisal

“We’re thinking about ditching performance appraisals” said Bill.  He was the CEO, I was sitting down with him and Theo his GM of HR.  “Or at least revamping the whole thing.”

“Run me through it” I prompted.  “What are you seeing that makes you think they aren’t working?”

Theo answered; “Formal feedback and anecdotal evidence.  We put out some simple questions, namely, to each employee; ‘I find the performance appraisal process to be useful to me in my work’, and to each manager ‘I find the performance appraisal process helps me to make my people more valuable’.  Both with the usual 5-point system between ‘not at all’ and ‘absolutely’.”

“What did you get?”

Bill jumped in; “We struggled to get to 3….which meant ‘somewhat’.  Mostly got 1s and 2s which means ‘not at all’ or ‘barely’ some value.”

“So as you can see…” Theo continued…”the system that my area leads isn’t too flash!”

“Maybe not” I answered. “But there’s a fair chance you’re looking at a symptom here, not a cause.”

“How can perform appraisals not working be a symptom?” asked Theo.  “A symptom of what?”

“Ineffective organisational design.”

“What do you mean organisational design?” Bill asked, a bit frustrated.  “What’s that got to do it with it, appraisals are one-to-one things, and that depends on the people involved.”

“It sure does” I said.  “And the people involved come from your approach to how you design your organisation.”

Bill stared at me.  “Go on” he said.

“Tell me this – when you have your regular sit-down with your Chair of the Board, do you find it useful?”.

“Yep.”

“And why’s that?”

“Because she asks good questions, checks in with me, gives me some perspective.  That sort of thing.”

“And are you glad she Chairs the Remuneration Committee that appraises your performance each year?”

Bill was quiet, mulling this over.

“I see what you mean”  he said.  “I was just imagining if one of the others on that Committee was the one ultimately making those calls.  I mean, don’t get me wrong, I like the person I’m thinking about, but I think it would feel more like a peer making calls on my future, rather than someone who can give me the wider angle.”

“And if that was the case, and you had to fill in a survey saying ‘I find the performance appraisal process to be useful to me in my work’…”

“….you’d get a low score from me” Bill concluded, sitting back.  He talk a deep breath and looked to his GM of HR…

Theo had been listening intently.  “So what you’re saying” he said, “is that the problem might not be with performance appraisals themselves, or the way we do them, these issues might actually be a symptom of managers that aren’t able to add value to the work of their people”.

“Yep.  This doesn’t rule out that the system itself might not be effective, but without the organisational design principles in place that lead to each person having a manager who can add value to their work….you’re pushing it uphill.”