February 13, 2010

The Question: Why Don’t Performance Plans and Appraisals Work?

You’ve seen a million articles by now titled, “Why Your Performance Appraisals Don’t Work” or “How to Fix Your Performance Appraisal Process,” and so many more like that. Don’t all these articles begin to ask a much bigger question, “If there was an answer to how to make effective performance evaluations, wouldn’t we all be practicing that solution by now?”

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After all, if there are 130,000,000 people employed in the US (a decent approximation, given the variety of data available), and if you average five hours per appraisal in manager and employee time spent, we’re spending over 500,000,000 hours in the US preparing for and conducting performance appraisals every year. At 2080 hours per year, that’s the equivalent of 240,000 FTE’s spent each year in the U.S. on this task.

Where’s the Return on Investment?

Yikes! So wouldn’t you, and your company, like a little ROI on that investment in time? Not to mention the cost of consultants to help design the process, your internal processing cost to enter appraisal data in HRIS systems and/or in paper files, etc.

So let’s make some real progress on this issue – and fair warning that our first step today will require your audience participation. If appraisals continue to persist in the face of all this feedback that they’re broken, as managers in the U.S. we’re seriously stuck.

Let’s try to get a little unstuck here, and make some progress. To start, let’s look at some key issues.

Strategic Objectives: Why Do Companies Conduct Performance Appraisals?

This question expresses my number one issue with employee performance plans and appraisals, and the issue gets more intense the longer I’m around performance appraisals.

I’m not talking about the obvious hygienic value, such as “employees deserve to hear how they’re doing at least once a year,” and “it’s important to have documentation in an employee’s file of performance issues, if disciplinary steps (including termination) are ever pursued.”

Instead, here’s the question about which I’m deeply curious: What impact on employee performance do we seek?

As soon as that question is asked, the next questions pop right up.

Do Effective Performance Evaluations Even Exist?

Is the impact you seek the impact performance appraisals have had on your personal performance? Is that the impact you’re seeing in your organization?

I, for one, am deeply curious about your experience. For example, do you see results from your performance appraisal process that include the following?

Greater employee productivity
Higher retention
Greater employee engagement and commitment to department or company goals
Other concrete results

While we’re at it, apply the same questions to you personally. Do you have the experience in your own professional life, where an appraisal resulted in greater productivity, an increase in your commitment to company goals, to staying with the company, or other positive result?

How Would You Improve Employee Performance Appraisals?

It seems to me, we’re starting with powerful questions. What has really worked for you, personally, to unlock your potential? What has unlocked the potential in your organization?

This deep curiosity stems from the following questions:

1. In terms of positive impact on employee performance – including your own – what positive concrete results are you seeing?
2. What results have you seen personally, in your own work performance, as a recipient of appraisals?

Inquiring minds want to know. My sense is that we need this grounding conversation as a first step to figure out how to get value from the process of reflecting on employees’ results.

Now it’s your turn…please type away and let us know.

Thanks,

Stuart Jennings

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