The “2 Flat Tires” of the Typical Performance Appraisal

October 15, 2012 § Leave a comment

I use Google Alerts to search the web and send me articles about performance evaluations.   Nearly every day I receive an article or blog entitled something like “How to Conduct an Effective Appraisal Meeting.”   It usually starts out with a sentence explaining how everyone dislikes conducting an appraisal but if the reader will only follow the author’s advice everything will work great.  The author then typically goes on to describe his or her “secret solutions” for making the appraisal meeting effective.   These articles are a complete waste of time because the typical appraisal process has systemic flaws already built into it.

One could write an article about “how to effectively drive a car that has two flat tires” but no one would read it because why would anyone want to do that?  No one wants to conduct a typical performance appraisal meeting either mostly because it also has “two flat tires” (metaphorically speaking). These two flaws include the grade given to the employee by the manager about his or her performance and the pay-for-performance policy tied to that grade. Giving advice about how to conduct a meeting that is systemically flawed, like the typical performance appraisal, makes as much sense as learning how to drive a car with two flat tires.

It is one of my missions in life to teach every leader on earth how to replace the typical appraisal process with one consistent with systems thinking.   The typical appraisal is ineffectual and damaging.

The typical appraisal is inconsistent with systems thinking.  This makes it impossible for it to ever predictably improve organizational performance. The process itself must be completely re-designed removing the rating of the employee (flat tire #1) and separating pay decisions (flat tire #2).  Regardless of what professional managers like Jack Welch say, these two “flat tires” make the typical appraisal ineffectual.

A new client told me how he nearly quit his new job twice in the past month.  Furthermore, in that same time frame, he had talked two of his colleagues “off the quitting ledge” as well.   It seems his sales department is under tremendous pressure to perform by meeting a nearly impossible stretch sales goal.  The boss was referred to by the sales people as “Captain Bligh” behind his back.   “Captain Bligh” set a very high end-of-year performance goal for the entire team.  He translated this end-of-year goal into a weekly sales target for each sales person and then calculated the number of “weekly sales appointments with presentations” each salesperson needed to deliver to meet that revenue goal.

Each week “Captain Bligh” would swoop into the office, review the sales performance and the number of appointments for each sales person.  He would loudly remind everyone of the goal and chastise those who were behind (in either or both the number of presentations and sales closed). He would remind them all that their bonus would be determined by their total performance and their performance appraisal rating would be determined by their weekly performance and then swoop back out.

These sales people are extremely talented, had been recruited from a list of top talent from the competition, were all highly compensated (high six figures) and yet were treated like children who needed to be threatened and prodded to “clean their rooms” and “eat their vegetables” or go without dinner.  This management style makes performance worse because it creates negative anxiety which reduces creative problem solving and it takes the focus off the real issues which relate to how the overall sales and marketing process is working.   By focusing on the individual performance of each sales person “Captain Bligh” was actually making performance worse by damaging motivation and increasing variation in the sales process.  He was flattening two of the tires on the sales force but expecting them to go at higher speeds.

Managers who use pay for performance and performance appraisal ratings to motivate people are making serious mistakes.   These two techniques are an attempt to control behaviors and control techniques with educated talent slows them down.

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