Don't Redesign Your Company's Performance Appraisal System, Scrap It!

"At a time when many corporations are engaged in unrelenting searches for ways to improve operations and reduce costs, there is one aspect of organizational life that has largely escaped scrutiny: Performance Appraisal. Perhaps this is because performance appraisals have become an unquestioned fact of life in most large organizations. As with most unquestioned facts, a critical examination can prove beneficial.

In this article, the author points out that the hard costs of operating formal performance appraisal systems are measured in billions of dollars annually and that the soft costs might be even higher. The primary offsets to these costs are the purported benefits of performance appraisal systems. Upon inspection, these appear to range from non-existent to minimal.

Here, then, is a situation rife with opportunity for organizations willing to challenge the status quo."

http://home.att.net/~nickols/scrap_it.htm

Employee Performance Reviews Do More Harm Than Good

"The worst part of performance reviews is the message you send overall — that work is an employee vs. employee competition. I can think of countless senior managers who lament how their employees don’t work well together and don’t collaborate. I can think of countless line employees (and senior managers) who complain about the brutal and vicious politics in their workplace. How surprising that people don’t work as a team when their personal compensation (and more importantly, their sense of self-worth) is impacted so directly by a system of employee vs. employee competition."

http://www.jacksonfish.com/blog/2009/05/21/employee-performance-reviews-do-more-harm-than-good/

Deming on Management - Performance Appraisal

"The fact is that the system that people work in and the interaction with people may account for 90 or 95 percent of performance."

http://curiouscat.com/deming/performanceappraisal.cfm

Deming and Performance Appraisal

"Performance appraisals were replaced with ‘development appraisals’ which focused on how they achieved the goals relative to company and team values, etc. Customer satisfaction and Teamwork where key values. Coaching was done throughout the year.. An employee education process and center soon followed to help employees and teams improve their performance; the company supported pursuit of undergraduate and advanced degrees and most important, partnering with nearby universities and professional associations to help every level of the organization improve and share our experiences with others."

http://management.curiouscatblog.net/2008/04/22/deming-and-performance-appraisal/

Total quality or performance appraisal: choose one.

"Most advocates of total quality believe that total quality management (TQM) and performance appraisal are incompatible. For them, company managers can choose to promote either of these two approaches but not both. Since fundamental TQM requirements contradict the basic elements of performance appraisal, it would be impossible to combine them. Thus, companies may have to reexamine their approaches to corporate leadership."

http://deming-network.org/files/tqmorpa.txt

"At the center of the case against performance appraisal are the fundamental values and principles of TQM. TQM requires customer-consciousness, systems-thinking, an understanding of variation, an appreciation of teamwork, a mastery of improvement methods, and an understanding of the process of personal motivation and learning. These very requirements of TQM are subverted by performance appraisal. TQM requires us to understand, control, and improve processes for the benefit of the customer. Performance appraisal aims at controlling an individual's behavior to the satisfaction of his or her manager. The two approaches represent a fundamental choice for leaders: one or the other; not both. "

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