!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> Streamline Training & Documentation: Performance Appraisals - Yea or Nay?

Saturday, August 01, 2009

Performance Appraisals - Yea or Nay?

I tend to agree with the views of Jeffrey Pfeffer on HR matters. However, I find myself departing from the strong position against formal performance appraisals that he takes in his column in the August 3 issue of Business Week.

Pfeffer argues that performance appraisals are generally inaccurate, citing a number of studies that have uncovered problems due to such factors as:
  • Bias, e.g., favoring employees you personally hired, favoring people who match you in gender and/or race, and "ingrained expectations about what types of people perform better."

  • Work that is difficult to evaluation objectively. For example:

    • Work, such as R&D, whose desired outcome is not entirely clear.

    • Work whose outcome arrives after a considerable passage of time.

    • Work to which employees contribute in interdependent fashion, so individual contributions are obscured.

    The upshot in the above situations is that "political skill — the ability to understand others and use that knowledge to influence them — helps individuals put a gloss on their performance that ensures a higher rating."1

  • A tendency of employees to discount appraisals by their managers that say their performance is not as sterling as their own self-appraisal tells them it is.
Pfeffer's culminating point is that
By focusing ... on the presumed deficiencies or strengths of individuals, performance reviews divert attention from the systemic reasons, such as inferior technology, that may be behind poor results.
My quarrel with Pfeffer's position is that his rejection of performance appraisals is too sweeping. Indeed, the suggestions Pfeffer offers for maximizing the accuracy of appraisals indicate where and how they can be useful.

For example, Pfeffer recommends minimizing rater bias by making "evaluation criteria more explicit and objective" and involving "more people in each review." He advises encouraging "managers to have frequent, ongoing conversations with their staff about performance." Finally, he cautions against forced comparisons of employees. All of these practices are part and parcel of well-designed performance management systems in use at companies that see value in the individual accountability that these systems afford.

With respect to systemic deficiencies, I would note that forward-thinking companies have adopted tools like the balanced scorecard to ensure that their analysis of performance drivers is comprehensive.

1 For an example of research indicating the influence of interpersonal style on performance evaluation, see "The Effects of Positive Affect and Gender on the Influence Tactics-Job Performance Relationship," by Stephanie L. Castro, Ceasar Douglas, Wayne A. Hochwarter, Gerald R. Ferris, and Dwight D. Frink, Journal of Leadership and Organizational Studies, Vol. 10, No. 1 (Summer 2003), pp. 1-18.