Performance Appraisals: Part 1

Got performance appraisals? Most companies do. How do you feel about your experiences with them? What emotions do you take with you into those meetings with your boss? What emotions do you take with you when you are the appraiser? What emotions does each person take out of those meetings? If appraisal is the constructive process everyone intends it to be, why do so many people leave these encounters feeling demoralized? As one man said to me “Well, I’ve just come from my annual beating.”

There is growing controversy surrounding performance appraisals. Some experts, such as management guru Peter Block, who began his career designing performance appraisals, now believe that the process should be abolished. Other human resource experts continue to champion appraisals. Where do you stand? Perhaps what follows will help you sort out the arguments.

Performance appraisals are intended to fulfill six important functions:

1. Improve company performance

2. Coach and guide employees

3. Provide feedback and communication from supervisor to worker

4. Align pay with value to the organization

5. Identify the best candidates for promotion and termination

6. Provide legal documentation when termination is required

Those who would abolish performance appraisals agree that these six functions are essential. Abolishers just don’t think that performance appraisals accomplish these functions very well. In fact, they argue that performance appraisals, while well intended, actually damage performance, communication, and development.

Supporters of performance appraisals recognize that appraisals have their problems. To solve those problems, new systems and new training programs are constantly being devised. Abolishers point out that despite a century of tinkering with the forms and training supervisors to conduct the appraisals, the process continues to create more problems than it solves. They argue that performance appraisals are based on faulty assumptions and cannot be fixed, i.e., it is like driving a Model T in the Indy 500. No amount of adjustment will make it competitive with more modern automobiles.

Here is some data to consider:

  • A 1997 survey by the Society for Human Resources Management found that 90% of appraisal systems are not effective.

  • A leading HR firm, Development Dimensions International, found that most employers were overwhelmingly dissatisfied with their performance appraisal systems.

  • An Industry Week survey found that only 18% felt that their performance reviews were effective.

Performance appraisals grew to maturity during an era that favored command and control management philosophies. Today, management thinking is changing. Modern management theory espouses concepts such as empowerment, teamwork, and Theory Y, i.e., that most people want to work, seek to grow, and care about company goals. Given the fact that performance appraisals developed during a time that encouraged command/control thinking, it is not surprising that they would be based on similar assumptions. By their very nature, performance appraisals perpetuate command and control thinking through their underlying assumptions.

Here are some examples:

  • Performance appraisals are a forced process. Employees don’t have a choice whether or not to participate. A compulsory process assumes that workers would not engage in growth, development, and coaching voluntarily. When something is forced on people, they typically do not take ownership of it, which encourages command and control management. It becomes a vicious circle. What would happen if you made feedback voluntary? Your answer to that question will tell you something about what you believe about people’s motivation.

  • Performance appraisal systems assume that employee development and performance is the responsibility of the organization and its managers. Modern management thinking sees people as more mature. It believes that individuals will take responsibility for their own behavior within cultures that encourage it. We must take responsibility for our own behavior or all is lost. Companies and managers are responsible for setting up conditions within which employees can perform at their best. Whether employees do so or not is ultimately up to them, whether we want it to be or not.

  • Appraisals are done on the company’s time table, annually, semi-annually, maybe even quarterly. This system basically says: “You will hear from me when I’m ready.” Human beings are not so organized in their need for feedback. What if feedback were constantly available so that people could get it when they knew that they needed or wanted it? Under such a system, people would take responsibility for seeking feedback (empowerment) rather than having it delivered to them on someone else’s schedule (command and control).

  • Appraisals assume that most people are primarily motivated by extrinsic factors, such as money and praise. While all of us enjoy money and praise, it is a person’s intrinsic motivation that powers outstanding performance. Extrinsic factors can generate whatever level of performance that can be coerced or cajoled.

  • Performance appraisals impose one system for coaching and learning on all participants. They assume that everyone teaches and learns in the same way. This is inaccurate. Different workers have different learning styles. Different managers have different strengths in relating to their direct reports. Defying this reality, performance appraisals inherently say: “Do this my way” rather than allowing supervisors and their reports to discover developmental methods that work best for them.

Now what: Suppose that this article convinces you to abandon performance appraisals in your shop. You would still need to satisfy the functions that led you to do appraisals in the first place. Next month, I will share with you what some companies have done to solve problems that appraisals were intended to solve but may not. In the meantime, I would like to hear from readers about their thoughts on performance appraisals, pro and con.

Abolishing Performance Appraisals by Tom Coens and Mary Jenkins provides an extended discussion of these issues. You may not agree with everything that they say but I guarantee you that the book will make you think.

Dana C. Ackley, Ph.D., is founder and CEO of EQ Leader, Inc., which helps individuals and companies solve problems and build skills. He can be reached at (540) 774-1927, or by e-mail at

The comprehensive science based EQ Leader Program builds lasting change in EQ skills that make a dramatic difference in performance.

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