Don’t Worry It’s Not You: Why Performance Appraisals Will Never Work

August 25, 2012 § Leave a comment

Most managers and employee agree that performance appraisals don’t really work very well.  They don’t fulfill their intended purposes.  Even Human Resource professionals acknowledge they fail at least ½ the time.  Considering they are the most common management tool for improving organizational performance, if I was an HR professional I might have trouble sleeping knowing they fail half the time.  But, we all know HR professionals sleep just fine because when performance appraisals fail they conveniently put the blame on a manager’s inability to carry out the process.

There are three claims HR professionals make against the manager.   The first claim usually is the managers need more training.  They claim the process is being sabotaged because the manager is incompetent and therefore the process is often completed late not done or done poorly. Secondly they blame the manager for making result of the annual appraisal a surprise instead of delivering valuable feedback consistently and frequently all during the year.  If there is a problem then managers should discuss it immediately and not wait. Finally managers are accused of being too biased in their assessment of employee performance.  The employee can detect this bias and claims a lack of fairness.

Unfortunately blaming the manager for the failure of the performance appraisal process is like blaming a driver for the poor performance of a car with two flat tires. It’s not the driver.  HR professionals are unaware of the design flaws in performance appraisals and so they find it convenient to just blame the “driver.”  The irony is the design flaws are frequently built into the process by HR.  They design the flaws into the process.  They watch the managers fail.  They blame the managers.  If it wasn’t so tragic it might make a good Seinfeld episode.

There are two important design flaws (the flat tires) in the appraisal that make it impossible to “drive” performance. First, it assumes individual performance can be measured in a complex system.  It can’t.  Second, it creates a “judge and judged” relationship.  This relationship damages trust but trust is a key ingredient for performance and quality improvement.

Individual performance in a complex system cannot be measured.  Individual performance can be expressed in the following formula:

X + XY = Individual Performance Measured

If X is the individual contribution (job performance) and Y represents the factors that impact the individual in his/her job then XY is the measure of the impact the system has on the individual.   There is a problem.   We  have two variables but only one equation.  The equation is therefore not solvable yet managers are asked to solve it in preparation for a performance appraisal meeting.  Asking managers to solve this unsolvable problem causes frustration and psychosis.  This might be one reason why managers procrastinate or do a poor job justifying the grade they assign the employee.

The manager is the judge and the employee is the judged.  As long as the manager is judging performance there can’t be optimum trust.  One of the most important needs of employees is to be treated with respect and fairness.  When they are judged it increases the probability of disappointment.  It also puts tremendous pressure on the manager to pretend to be omniscient (all knowing).  This expectation of omniscience can also create a psychotic reaction.

Blaming the manager for the results that come from design flaws is not just incorrect; it creates a psychosis which manifests waste in ways that often cannot be measured.  The next time HR tells you your employee complained about his/her performance appraisal remind them of the design flaws.  Tell them it’s not you.  I am sure they will understand.


2 Reasons Why Your Performance Appraisal is NOT Really About You

August 14, 2012 § Leave a comment

My sister worked for a company that was about to be sold to an investor. She called me in a panic. Her performance appraisal was scheduled and she was nervous they were about to fire her right before the sale. I assured her the request to schedule a performance appraisal was to provide the new buyer with evidence about the performance of the current employees. I was sure the buyer merely wanted to have some evidence about how effective they were and if they could support the change in ownership.

The next day she called to tell me I was right. Her original fears were unfounded. Her performance review was excellent and met all her expectations. Clearly the seller (my sister’s current employer) wanted to convince the buyer the people were excellent.

Was that performance appraisal really about her or about the sale? Most performance appraisals are not really about the people but instead about some other motivation or intended outcome. This can include things such as a bias, a manipulation, poor leadership, justification for a raise or bonus, justification for a firing, and justification for a promotion or a demotion. Aren’t performance appraisals supposed to be about improving the performance of the individual? If so, why would leaders misuse the policy for their own selfish motivations?

The current performance appraisal process really doesn’t work well and there are two basic reasons why:

1. The basic assumptions behind the current appraisal are flawed

2. The appraisal process is most often manipulated to justify some motivation other than its original purpose e.g. justifying a raise (or bonus) to keep a high performer happy or justifying the firing of a poor performer.

The main assumption of the current appraisal process is that improving the quality of the people will improve the organizational performance. This describes our desire to analyze the parts of a whole in order to understand the whole. This is inconsistent consistent with systems thinking and leaders must embrace systems thinking in order to achieve predictable organization improvement.

Most leaders now assume that poor organizational performance is rooted in poor employee performance. Nearly ninety percent of organizations conduct performance appraisals and that is its main purpose. This is merely a dysfunctional yet sophisticated form of blame. Additional assumptions that follow from this are:

· Individuals have control over the results of their work and the factors that allow them to achieve their goals. This is false. There are always many factors that contribute to the success of a goal.

· Managers can evaluate individual performance separate from the contributions of others and the influence of the work tools, environment etc. This is false. Managers cannot separate their bias (either positive or negative) from their evaluation.

None of these are true because they are inconsistent with systems thinking. Instead, the correct assumption is: “the quality of the interactions between employees (and departments) is more important for improvement of the organization than improving the quality of the people.” In other words, you can’t separate the evaluation of the person from the quality of the interactions that person has with their co-workers and the working environment. If this is true one must conclude that the typical appraisal doesn’t evaluate the individual. It evaluates their interactions. It is not about the person it’s about the interactions of that person in that particular environment.

Leaders often manipulate the appraisal process to serve their own purposes. Just as with my sister, the owner manipulated the process to make all employees “look good” so the new buyer would be impressed. This compromised the opportunity to receive real feedback for improvement. It compromised the truth.

Leaders very often will compromise the process to achieve some short term goal. The appraisal then becomes more about achieving the goal and less about the person receiving the appraisal.

That performance appraisal with your name on it is really NOT about you. It is really about how you are able to interact with others and environmental factors outside of your control.

Who is Really Accountable?

August 9, 2012 § Leave a comment

As a young salesman I was assigned one of the largest accounts in our company: Gillette. This was a Fortune 500 company with high visibility and great influence on our business. I was lucky to be in the right place at the right time with this account; the people at Gillette had been working on a new product for two years; one month after my assignment to the account I was awarded a very large contract.  Instantly I was seen as a sales genius because I had exceeded my goals.

I was asked to handle the large order; I had not been trained properly, however, and two months after winning the business, I came to find out that we were going to miss three important ship dates. There was nothing we could do but agree to custom-make new packaging on the dates Gillette was suggesting – an incredibly expensive and time-consuming option.

During the meeting where this issue was discussed, my boss kept glaring at me and giving me dirty looks. From his point of view, I had dropped the ball; I had ignored a problem and let matters drift to a point where the company would have to incur a great deal of overtime to accommodate the orders.

I was a hero one week, and then two months later I was a bum. Why? because there were factors outside of my control. I had made an important sales goal but I had failed to schedule the order properly because of a lack of training. No one had ever shown me how to schedule the order.

Yes, I was naive and inexperienced, but that’s not the most important lesson of the story.

The fact that anyone could go from being a hero to a bum in just two months tells me I should not have been held accountable for this mistake.  Why should I have been “held accountable” for something I didn’t understand and had never been taught how to do? For that matter, why should I have received accolades for an order that fell into my lap?

Why should I have been blamed for a mistake (poor planning) when I was completely unaware of what I should do? Sure, I could have asked the right questions. Perhaps I should have thought about it harder. Would lecturing me about those points really help the organization avoid this type of situation in the future? Would “holding me accountable” for my mistake really help the organization in the future? Would the fear of punishment help future young sales people more than improvements in the training process?

Leaders won’t want to hear this but most of the time the root cause of employee errors can be traced back to a policy, process, or decision controlled by the leaders.

Look at the latest oil spill debacle in the Gulf of Mexico caused by BP.  The oil industry is one of the most regulated industries in the world.  Our Government approved all of the decisions BP made to manage the oil rig including insisting that drilling occur in very deep water well off shore, providing incorrect estimates of damage a deep water spill might cause, and the inspections of work during the drilling etc.   The Government was about to award BP a safety award within days of the accident.  How could BP be a hero one day and a bum the next?

Systems are complex.  To put all the blame on either me or on BP is at best sophomoric and at worst creates an environment that prevents the resolution of the real root causes.  Those caused by the leader(s).

Most organizations have complex and dysfunctional systems that cause errors.  The errors most often show up in employee work.  Most organizations use their performance management system to punish the employee with poor ratings or worse.  This does nothing to solve the real issues.  This does nothing to demonstrate real leadership.  This does nothing to fix the complex system.  We need a new theory of management to look at errors from a system perspective.

Leaders need a new way of thinking to avoid unsophisticated responses that create heroes one day and bums the next.

As a Leader, What Message are you Sending?

August 9, 2012 § Leave a comment

I was walking our two dogs, as I do almost every morning. We go to the nearby park and walk the 2 miles rather quickly so we all get good exercise. Of course I had my Blackberry so when I think of a quick call I can make it during the walk. While striding up a gradual hill I started breathing a little heavy when I suddenly remembered a call I needed to make to one of my strategic partners. I needed to confirm a seminar date that was scheduled for the end of the following week.


I called my client and one of the owners, Diane, answered the call. I asked to speak to the scheduler Evelyn. As I was asking I was breathing even heavier. Apparently talking and walking up hill creates even heavier breathing.  I am sure I sounded like a nasty pervert as I asked Diane to pass on a message to Evelyn to return my call. After I hung up I realized I should have explained my context. What impression did I make? If she didn’t know me she may have thought I was an excited pervert while I requested, “Please tell Evelyn to call me. I have a few questions for her.”  Thank goodness we have a good trusting relationship so I doubt Diane will think poorly of me.  But, can I be sure?


Very often leaders exhibit negative behaviors that unintentionally and unknowingly create the wrong impression.  These behaviors can damage the motivation and productivity of employees in ways that are immeasurable.  Most organizations have the following dysfunctional cultural characteristics:

  • The leader misbehaves
  • The poor behavior of the leader negatively impacts the employee’s motivation and attitude toward the leader and the organization
  • Most of the employees are too afraid to give feedback to the leader and so the poor behavior continues
  • The employees begin to exhibit poor behaviors
  • The leader conducts a performance appraisal to correct the employee behaviors


This typical series of interactions does little to address the real root cause of the dysfunction, i.e. the leader’s behaviors. Instead, these cultural procedures serve to sustain the dysfunction.


Leaders are not, nor will they ever be, omnipotent.  When they misbehave they need to know it and they need help to change their behaviors to prevent the unintended negative consequences.

When I first begin my work with clients I always explain to the Senior Leaders that one of my roles is to give feedback to them about poor behaviors.  I ask their permission to provide that feedback and I insist they agree. I always get that agreement because the leaders (and all people) already think they are behaving correctly.   Leaders who misbehave rarely do so purposefully.  Almost always they are unaware of the impact on others.  They need to be respectfully told.

Ask yourself, how many companies proactively welcome respectful feedback to leaders by employees?  I often see leaders who insist on strict discipline yet consistently show up late to meetings.  I also have seen leaders deliver criticism to one direct report for a particular issue and then fail to deliver the same level of outrage to a different employee for a similar issue.

To optimize trust and create a high performance culture, leaders must be willing to accept the responsibility for the impressions they create.  Because they cannot be omnipotent, they must accept frequent respectful feedback about poor behaviors.  They also need to send a grateful message to the messenger.  Any defensive reaction will inhibit the feedback in the future and help continue the dysfunction.

Therefore, leaders need to either be very insightful and emotionally intelligent in order to observe their own dysfunctional and misunderstood behaviors.  In other words, they need to be aware of their “heavy breathing”.  In addition, the leader must be truly courageous and purposely set up a small team of trusted advisors who will provide respectful feedback when he/she unconsciously creates the wrong impression.  Without these two approaches surely the negative impact on productivity will continue unchecked.

Leaders need to be aware of the impact and impressions their behavior creates.   A leader’s number one job is to create a functional and respectful context.  Often leaders unknowingly damage this environment and therefore unconsciously damage productivity.

Don’t Get Caught in the Middle: How to Avoid Becoming a Mediator for Employees

August 9, 2012 § 1 Comment

When I was a young boy my friends and I would often play “monkey in the Middle”.  It was a rather cruel but fun game.  The “monkey” was the person in between two others who would throw a ball back and forth.  The “monkey” would run back and forth jumping to catch, or at least touch, the ball.  Once touched the person who threw it would then take the “monkey’s” place in the middle.  We counted the number of throws and kept score. The one who had thrown the ball the most times was the winner.  In other words, the one who was able to stay out of the middle the longest won.

As a leader have you ever found yourself in the middle of a conflict between two employees? Have you ever been able to mediate a solution for them?  How much time did it take?  How much energy did you expend?  Furthermore, were you able to resolve the issue between them and feel confident it would not return?  I doubt it.  Intermediaries usually end up running back and forth trying to understand each side of the argument, reaching for the “ball”, rarely touching it, and often ending up an “exhausted loser”.

How can we avoid this unfortunate, ineffective, and wasteful situation as leaders?  We must create an environment of engagement and autonomy.  We must avoid creating an environment of dependency, victim-hood, and bureaucracy.  When employees are autonomous, and therefore responsible for resolving their own conflicts, they first do whatever they can to avoid the negative conflicts.  Yet once a conflict emerges, they quickly take action and/or they dismiss it as unimportant.  In either case the conflict does not become a “time waster” as it does when a leader attempts to mediate.

There are three basic steps to create an environment of engagement and autonomy allowing, and encouraging employees to resolve their own conflicts.   First, clear operational behaviors must be created that clearly spell out how conflict will be seen and interpreted.  Here is a good question: As a leader, do you want to eliminate all conflict?   NO!  Conflict means learning.  Conflict is a symptom of two differing points of view or two differing methods of solving a problem.  So the first message about conflict is in this list of behaviors is: “we embrace conflict as a learning experience.”

Second, there needs to be a tool employees can use to calm nerves and to get to the real issues during a conflict.  This tool can help influence productive discussion and diffuse emotional distress which often accompanies negative conflict.  A leader must provide a tool for employees to talk to each other during these stressful and emotional times.

Third, there must be a tool to smooth over hurt feelings if one of the employees is accidentally wronged during the conflict.  Often times differing communication styles (personalities) can cause offense.  A disrespectful offense that goes unacknowledged creates a barrier to resolving the conflict.  It damages the relationship and the trust.  Providing a tool that helps employees to approach each other when they are wronged (disrespected) creates the autonomy they need to remove this relationship barrier.  Every employee must be given permission to use such a tool and every employee must be asked to accept this feedback when offered.

I challenge you to think of a time when you were the mediator of a conflict and you were able to solve the issue between the two people without their help and cooperation.  Cooperation is an outcome of having all three of these elements in place and trusting the employees to use the tools to solve their own problems.  Any problem they don’t resolve themselves will resurface anyway.  When employees get the message that they can “go to the boss” and he/she will solve it” they become victims of their circumstances.  Victims cost organizations money and time.

So what should a leader do when an employee complains about another employee and asks the “boss” to intervene?  Gently say no. If you have created the environment of autonomy and engagement with these three tools you can turn that employee back to use the tools.  Turn the employee back and gently remind them they have two choices, either forget the conflict because it is trivial or use the tools to solve it themselves.  It is their choice.  This keeps the leader out of the middle and prevents the “monkey in the middle game from exhausting the leader and wasting everyone’s time.

Are You Stealing Accountability?

August 9, 2012 § Leave a comment

I love my 10 year old Acura.  Although it has 250,000 it runs beautifully.  Of course, with a 10 year old car one must expect to replace parts occasionally.  One morning the front left ball joint failed and I was stranded at a park with my dogs.

Luckily I have “TRIPLE A” membership. I called and requested a tow.  The nature of the breakdown caused the front end to be nearly touching the pavement. I cautioned the “TRIPLE A” agent to send the right kind of tow truck to handle such a situation. She assured me “all our service stations are knowledgeable professional shops”.   Of course, you guessed it, when the truck arrived the driver proclaimed, “I brought the wrong kind of truck.  I will need to get a different one.”   He suggested I call “TRIPLE A” and report the error and gain approval for him to implement the new action.

I took his advice and called “TRIPLE A”.  When a woman answered, a different person from the original customer service representative, I realized the explanation was going to be challenging and the accountability for the error was non-existent.

It took a while but the driver returned with the correct truck and I was off to have my car repaired.  On the way to the shop I was wondering how, and if, “TRIPLE A” could learn from this situation.  I tried to warn the first customer service person to avoid a mistake.  The mistake still happened and it caused wasted time for “TRIPLE A”, the tow truck driver, the towing company and the customer (me).  What was the root cause(s) of the error and how could “TRIPLE A” learn to avoid it in the future?  Unless accountability is set up into the system the answers to these questions will be elusive and the mistakes will likely reoccur.

Accountability means to be responsible and it requires four elements.  First people need to be aware of the situation or problem.  Second, they must understand a specific process to follow.  Third, they must agree to follow the process.  Finally, there must be feedback (data or consequences) if the process fails.  It is a leader’s responsibility to set up the system so that all four elements are present.  Without these elements a leader just ends up blaming people for mistakes and learning is compromised.

In my story all four elements were missing.   The initial customer service person was clearly un-aware of the need or the meaning of the information I provided her regarding the condition of the car and the type of truck needed.   In addition, she had no clear process (I am guessing because of my impression) to handle this information or request.  Third, she obviously made no agreement to follow such a process.   Finally, it seems there was no feedback to either her or any other customer service person regarding the mistake (again I am guessing).

Are you setting up accountability or just blaming people for mistakes when they occur?  If you don’t set up accountability then you are stealing the opportunity from people to optimize their learning.  Perhaps if there was a process to escalate the call to a supervisory level when a puzzling or challenging question was asked that might have begun to set up the accountability system in “TRIPLE A”.   Perhaps if the telephone system was set up to quickly escalate the call, as needed, to a knowledgeable technician. Perhaps if the customer service person was trained to recognize the opportunity and to transfer the call, the second element of accountability would be met.  Perhaps if there was a feedback loop to report wasted time for tow truck drivers it would create the forth element of accountability.  Perhaps if there was a team of knowledgeable process experts who could study the root causes and therefore modify the process or change the training processes (consequences and feedback) the mistake would not be repeated.

It is a leader’s job to set up the accountability system.  In the 15 years of consulting rarely have I seen an organization with a robust accountability system.  Instead, leaders tend to look for mistakes, guess at root causes on their own, and use a performance appraisal process to punish the employee who unfortunately found him or herself in the middle of a dysfunctional system.

Are you stealing accountability from your organization and from your people?  Stop now and set up the four key elements.  Stealing accountability is wasteful and it creates victims not leaders.

Attempting Fairness with Policy Alone Damages Engagement

August 9, 2012 § Leave a comment

Treating all employees fairly with correct policy sounds important, reasonable, and necessary.  All managers should do it. Correct?  Unfortunately the concept of fairness is vague at best and misleading at worst because it depends on the interpretation of each individual and that creates too much variation in interpretation.  An attempt to manage fairness with policy alone creates a lack of employee engagement especially when the process is ineffective or non-existent.

My daughter Emily is a junior in college and works part time for a catering company.  She drives to one of the catering company clients to serve dinner to elderly customers at a Senior Living facility.  Her boss rarely sees her.  He does little more than schedule the workers.  He is rarely at the location because the students work well as a team and need little or no supervision.  The process for serving dinner is very predictable and relatively easy to learn and implement.

After working a year for this company Emily was scheduled for a raise.  The company policy required she receive a performance review before she could be approved for her raise.  This policy was an attempt to treat all employees fairly by insuring all employees who receive a raise in fact deserve one.  It sounds reasonable and necessary however, there is a problem.  The boss is rarely, if ever, available to observe her performance.  He therefore must guess.  There is no predictable process in place to access Emily’s performance.  The policy exists but there is no way to carry it out because the process can’t deliver it.

The boss and Emily met.  He explained his rating of “3.2” on a scale of 1 to 4.  In this company’s performance management policy the “1” rating is unsatisfactory and requires immediate dismissal; the “2” required immediate improvement with a performance plan; the “3” means “meets expectations”; and the “4” means “exceptional”.  The boss explained that “no one ever” receives a “4” rating because he doesn’t believe in it.  Everyone can improve and therefore the rating of “exceptional” is unreachable and unattainable.  The boss had his own way of interpreting the policy.

My daughter was disappointed in her rating because she had never missed a day of work scheduled, had filled in for other employees when they called in sick or needed an evening off multiple times, and the clients loved her. She continually received unsolicited accolades and even gifts from the seniors.  She was not only disappointed but also appalled by his explanation.  She felt de-motivated and discouraged.

She decided to speak up asking, “How can you rate my performance, you are never here?”   “That’s not true” he replied.  “Occasionally I arrive at the end of the shift in time for me to see you mopping the floor.”  Policy alone cannot deliver fairness nor can it deliver engagement.  An event that was intended to increase engagement actually damaged it.  Policies don’t deliver fairness, processes do.  Without predictable processes, based on sound theory, fairness will be non-existent and engagement will be damaged.

While all employees need to understand policy it is not the policy alone that delivers the outcomes.  It is the process.  Employees also need to be treated as individuals.  Their individual needs, characteristics, skills all need to be addressed to honor their unique make-up.  The current performance appraisal process doesn’t deliver this (nor will it ever be able to do so in its current form).  Although my daughter’s story is a bit unusual in its detail, the outcome is very common, i.e. a disengaged employee after a “good” performance review.

Policy alone cannot deliver fairness and engagement.  A process that is both flexible and clear is needed to manage the variation in desired outcomes.  Too often a leader “sends down” edicts to the masses and expects compliance.  It just doesn’t work that way.  That is an unsophisticated way of achieving engagement and the results show it.