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Leslie Allan

Business Performance

Managing Director

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Blog: Why the performance appraisal system is in trouble


Performance appraisals are in trouble and sinking fast. They negatively affect workplace relationships and they do not support goal achievement.

I recently wrote an article on survey answers on performance management in which I demonstrated the impact of this systemic failure. Everyone from employee to manager to human resources practitioner dislikes them.
It is a puzzle. Newly designed and implemented performance appraisal systems are expected to be different from the norm, and yet they persistently fail and lose all credibility with their intended users. Here I put in a nutshell my view on the causes of this failure to meet expectations:
1. Recency effect and other biases
Through credible research, we know that extraneous factors not related to actual performance influence managers inadvertently and unconsciously. Such factors include the passage of time; the most recent performance/behavior is front of mind with other actions forgotten or diminished. Two other common bias factors are the halo and contrast effects.
2. What feedback?
Some managers don’t believe in the necessity of giving feedback and others think the only time feedback needs to be given is at the yearly appraisal meeting.
3. Emotional pressure cooker
Managers who avoid addressing performance problems in a timely manner often build up suppressed frustration. All that tension is uncorked at appraisal time and overwhelms the employee by the emotional outburst that results.
4. Failure to service the system
Inattention to the organization’s systems – in their component parts and as a whole – causes close to 80% of performance disappointments. Looking to the individual for an explanation, we fail to see that the system itself is ailing and failing all of us.
5. Team vs. individual
People working together is essential for business success. By focusing on the individuals and their performance in isolation, we miss the opportunity to improve team cohesion and co-operation.
6. Subsidizing subversion
Pay someone to be excellent and you often open the door to competitive and dysfunctional behavior. Employees find ways of undermining their “competitors” through rumor mongering, not sharing useful information and manipulating goals and measures (under-promise and over-deliver). Rewarding employees financially is often a counterproductive way of encouraging co-operation towards a common purpose.
7. Buying emotional hooks vs. rewarding performance
Ego, status and feel-good triggers all too often motivate employees who work for monetary rewards, which take the eye off the true priority: excellence in performance.
8. Last year’s bonus is this year’s standard
Pattern-recognition is typically a human strength. We see a pattern; we create a rule, and sometimes it is wrong – it wasn’t really a pattern. Employees quickly start assuming they are entitled to the same bonus as the previous year, regardless of reality.
Next time, I will share my thoughts on effective performance management systems. Have you experienced additional problems with your performance appraisal process? How were they resolved? Please tell us about it.
Leslie Allan is managing director of business consultancy, Business Performance Pty Ltd.
We welcome any and all contributions from the community, so please feel free to share your views and opinions with us, your colleagues and peers via our blogs section.

3 Responses

  1. Appraisals that demotivate and send performance into a spin

    Agree, agree, agree. It’s been the same for years. EXCEPT where the board decides they need a change.

    When you begin to attribute success to strengths in working beahaviours using knowledge gained and passed on, then you begin to find the positives in the workforce, if that is what you decide to look for.

    Nothing big, just one positive at a time. It is much easier to work on the things that people do well than try to repair things they do badly. If you know how something should be done well then half the battle is won.

    Throw the annual and sixmonthly appraisals out of the window and begin a programme base on activities that improves key performance apects of the job holders output.

    Some will call this competence management.

    All managers need to be trained in the art of communication as well as the competencies required of them to carry out this type of appraisal. It includes hard and soft skill supported at all management levels.

    It requires a positive VISION from the board regarding the business vision that can be easily understood by everyone so that can be empowered in the true sense to take responsibility for their actions towards achiveing success, accepting that mistakes can happen but should not be punished if doen in good faith.

    Constance monitoring and discussion replaces the dreaded appraisal meeting, and actions are still recorded objectively.

    This may require specialist assistance to get of the ground, but once it is running can really turn in fantastic performance improvements and motiviation without the need to constantly spend money on "prizes".

    This is where HR and the board have to come together to decide what the company is trying to achieve and how the people can and will make that happen. It will need active job descriptions that describe the what and the how and it will require a commitment from all levels of management to make it happen.

  2. great post.

    There are some great tips here as appraisals are something that can really create tension and resentment in the office if not handled properly. It is important to nip problems in the bud and if managers see something that requires addressing that they do so promptly otherwise is an employee is led to believe they are doing fine and then told a couple months down the line they have been underperforming, it can lead to a difficult conversation. 


    David Evans, commercial director at accessplanit, specialist in learning management software and learning management system

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Leslie Allan

Managing Director

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