An Alternative to Performance Appraisal

By Erik Van Slyke Jun 2, 2010
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It is a generally accepted truth that employees, managers and HR professionals loathe the ritual of the performance appraisal—a time-intensive process that often fails to improve performance and risks damaging relationships between managers and employees. Instead, organizations might want to try focusing on strengthening the capability of managers to motivate high performance.

Systems Can’t Guarantee Results

HR professionals have no doubt seen extensive articles, books, presentations and technologies claiming to have identified the solution to improved performance appraisals. Some might have even tried one or two new approaches hoping to affect a positive change only to realize, in the end, that the new tool was nothing more than the same old thing hidden behind different packaging.

Case in point: One senior HR executive, who was discussing her organization’s plan to implement new performance management technology, was very excited about the technical features of the tool, the quality of the vendor and how rapidly she could deploy the solution. Surely she must be looking forward to the increased efficiency the system would bring such as timelier submissions, easier data entry or access to information and analytics.

Yet when asked what larger objectives she hoped to achieve with the new system, she said, “Our CEO wants to create a high-performance culture, and we think that a better performance appraisal process and the right tool to deliver it will get us there.” Their new and “improved” system included a 10-point scale (up from five), a new universal competency model and the addition of an evaluation of how well employees exhibited company values.

Forty-five years after the Harvard Business Review published the research article “Split Roles in Performance Appraisal,” many still believe that performance appraisal works. The study, conducted at General Electric, found not only that the company’s performance management system didn’t work but also that it produced results that were the opposite of what was intended. The researchers found that:

  • Criticism hinders achievement of goals.
  • Praise has little effect.
  • Performance improves most when specific goals are established.
  • Defensiveness resulting from critical appraisal produces inferior performance.
  • Coaching should be a day-to-day, not a once-a-year, activity.
  • Collaborative, continuing goal setting, not criticism, improves performance.
  • Participation by the employee in the goal-setting procedure helps produce favorable results.
  • Performance appraisal “interviews” should not be conducted with salary or promotion in the balance.

Other studies have reached similar conclusions.

A Beautiful Mind

Research conducted with brain scanning technologies adds a dimension to the debate about performance appraisal.

The brain has two ways to process information. The rational mode uses the part of the brain called the neocortex and is characterized as conscious, thoughtful, analytical and reflecting.

The emotional mode is quicker and more powerful than the rational mind. Controlled by the amygdala, the emotional part of the brain takes information from the surrounding environment and acts without thinking, often in illogical ways. It determines such primitive reactions as whether to fight or flee.

Unfortunately, the emotional mind is often wrong because it associates current information with the feelings or moods stored in memory and reacts to the current situation without distinguishing it from the past. It operates based on its perceptions of the data. How information seems or what it reminds us of is far more important than the reality of that information.

The rational mind, by contrast, is more interested in objective information. It wants facts, figures and data. It wants to weigh the information carefully, analyze it, contemplate it, compare it to past data and produce logical behavioral output. It operates more slowly, in part because it requires input from the emotional mind to make decisions about the information. But by the time the rational mind has completed its examination, the faster and more action-oriented emotional mind has generated a behavior. It might be the wrong behavior, but, by then, it is too late.

The emotional mind can create significant confusion in the rational mind because imperfect emotional data often is processed with the same significance as objective information. As a result, emotions lying just beneath the surface of awareness can be a strong guiding force behind actions and decisions. That’s why employees might react defensively even when a manager’s performance feedback is positive and designed to praise.

This phenomenon is known as cognitive dissonance, the uncomfortable feeling one gets when holding two simultaneous but contradictory thoughts, regardless of whether the thoughts are based on facts, perceptions, beliefs, behaviors, attitudes or opinions.

Cognitive dissonance can be felt as stress, anxiety, shame, anger, grief, “the blues” or another negative emotional state. Since these feelings are “bad” and interfere with the human being’s desired state of internal harmony, people tend to do everything they can to get rid of the negative emotion by changing or justifying their attitudes, beliefs and behaviors. There are two choices:

  • Realize the error of one’s ways and modify the belief by changing the rational mind.
  • Dig in one’s heels and prepare to provide additional reasons to defend one’s belief.

In most cases employees resist change. This resistance creates further justification of the employees’ point of view. As a result, if an employee finally “submits” to a performance improvement plan, they usually do so reluctantly and out of fear of job loss. Improved employee performance is an unlikely by-product of this experience.

Why Conduct Performance Appraisals?

In some cases the performance appraisal is not used to sustain or improve job performance but to collect data on performance history in case of legal challenges. In other cases it is used as a resource for decisions about pay, promotions or workforce reductions.

Yet performance appraisals often fail as a tool for these objectives as well. For example, courts often view appraisals as biased and, therefore, less valid than other, more “factual” sources of legal evidence. And HR professionals might believe that managers have written their appraisals with an eye toward rewarding certain employees.

As a result, performance appraisals are considered by many to be an unreliable tool for improving performance and an ineffective tool for legal defense and employment decisions.

Improving Employee Performance

So what works? Many believe that the most effective and sustainable solution for improving performance is to focus on intrinsic motivation. High performance comes when people love what they do. Some of the most dedicated employees—volunteers—work for free, putting in countless hours for organizations that give them a sense of purpose. They don’t care if they get raises, bonuses or even praise. They volunteer because their work has meaning and because they feel like they are making a contribution.

Some people approach their jobs with the same passion. They are engaged and plugged in and have fun. There’s no need to manage their performance because they manage it themselves.

Though it might seem, at first glance, as if managers have little ability to affect intrinsic motivation, they can create an environment that activates intrinsic motivation and provides the fuel for higher levels of performance if they:

Listen. When managers listen to employees they begin to understand employees’ passions, strengths and ambitions and the possible ways these might be integrated with work. Listening helps employees feel understood and valued by their manager—one of the drivers of employee engagement—and demonstrates that managers are open to new ideas and collaboration.

Establish Goals. With the collaborative foundation established by listening, the next important tool for lighting the intrinsic fire is goals. These aren’t the goals that are set once a year and ignored until it’s time for the annual review. These are goals that are set, reviewed and tweaked every day. A focus on new and more challenging goals—combined with an understanding of an employee’s passions, strengths and ambitions—gives managers the ability to align business and employee goals and create a deeper sense of purpose.

Focus on Results. According to Cali Ressler and Jody Thompson, authors of Why Work Sucks and How to Fix It (Portfolio Hardcover, 2008), companies that establish a results-focused work environment experience increased employee engagement and average productivity increases of 35 percent. Tools like “results-oriented job descriptions” can help provide a tangible, purpose-focused foundation for conversations between employees and managers.

Provide Autonomy. Autonomy is the degree to which a job provides employees with the discretion and independence to determine how their work is to be completed. High levels of autonomy have been shown to increase engagement as well as motivation to perform the job. In addition, research has shown, when employees have greater levels of autonomy, they are better able to use their personal attributes to contribute to job performance.

Getting high performance from employees is not about reward and punishment or praise and criticism. It’s about engaging employees, tapping passions and encouraging autonomy and collaboration. High performance happens when people who enjoy what they do and who have fun figuring out how they can do it better work side by side.

Erik Van Slyke is the managing director of Solleva Group, a change management consulting firm, and the author of Listening to Conflict (AMACOM, 1999).​

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