A Reversal of Fortunes: Who is Really Appraised By the Performance Appraisal Process?

Now, I know I’ve said this before but, just because something is printed in HBR doesn’t necessarily make it true or valuable. I was reminded recently of an article in HBR that provides tips for how to do effective performance reviews, Ditch Performance Reviews? How About Learn to do Them Well? (Written by University of Michigan professors Maxim Sytch and D. Scott DeRue) For as much as I am asked to comment in the media about the annual performance appraisal process, it is clear to me that organizations absolutely insist on keeping them around. You see, business has been “tweaking” performance appraisals for more than 50 years and it is still the occasion for the most contentious interaction between employee and manager.

Tweaking a bad system, while having the potential for making it “less bad,” cannot make it good or effective.  Much has been written attributing the “badness” to the frequency of appraisal.  This HBR article suggests that increasing the frequency from annual to quarterly will improve its effectiveness. While frequency is an issue with the annual review, going from an annual to a quarterly appraisal will not address the frequency issue in any significant way.  In fact it  just keeps employees in a perpetual state of agitation over the process—they are not over the negative emotion of the last one before it is time to do it again. It bears repeating, as I have said this many times before, “the best job people will ever have is one where they know at the end of every day how well they have done.” The real problem of performance appraisal is not how often or even how well the appraisal is done, but the fact that it is a divisive, labeling process. 

Once employees have been labeled as “average or below average” it is very difficult to shake the label. Years ago I was employed by the Georgia State Department of Vocational Rehabilitation to give IQ tests to children to determine if they qualified for State services of various kinds.  Qualification was based primarily on low intelligence. One day a young boy I was testing, looked at me and said expectantly, “If I do good on this test will I be able to get out of Special Ed?”  I can’t tell you what I said because the question depressed me to the point that at that moment I began to question the value of the knowing one’s IQ.  Soon after that I quit giving them.  Since he had been labeled “Special Ed”, I knew that the chances of this boy getting into a regular classroom were slim and none.  Unfortunately, once you have the label, you are treated as though you are the label.

  I am sure there will be readers who don’t like that fact that I am writing about special needs children in the context of writing about a “sacred cow” of business.  However, the process is essentially the same.  Once an employee is labeled “average” only the rare bird will escape the label.  The label creates certain expectations about ‘the labeled” and any opportunity to demonstrate they are not the label only provides others that you are the label, “That was really good for someone who is only of average ability.” You need not respond to this blog by giving me examples of people who have overcome the process. I know there are some but I assure you they are the exception. 

There should be only one business reason for giving an appraisal (I prefer to rename it, “progress report.”) and that is to help the employee improve. The mission of a boss at any level of the organization is to “create successful employees.”  In this sense a performance appraisal of direct reports is a scorecard of the boss’ effectiveness, not the employees! How about that for a surprising turn of events? Professors Sytch and DeRue have it all wrong. Comparing one employee to another promotes mediocrity, not excellence.  Let’s get rid of this outdated, ineffective, wasteful labeling process and get back to focusing on an effective coaching process that creates an achievement-oriented culture. And all the people said, “Amen!”

For more about the problems of performance appraisal and some ideas about what to do instead read OOPS!: 13 Management Practices That Waste Time and Money.

Posted by Aubrey Daniels, Ph.D.

Aubrey is a thought leader and expert on management, leadership, safety and workplace issues. For the past 40 years, he has been dedicated to helping people and organizations apply the laws of human behavior to optimize performance.