04th September 2015

A Further Uneasy Look at Performance Appraisal

Recently I published a post highlighting that while there has been a lot written about the failings of performance management practices and, the fact some high profile organisations have announced changes to or even dumped their performance management practices, that Douglas MacGregor pointed out similar issues with the practice of performance appraisal nearly sixty years ago.

The previous post highlighted the issues with the practice of Performance Management that McGregor identified so now it’s time to look at his suggestions for how things might be better.  In the next post look for our insights on how organisations might take performance management to the next level.

Back to 1957 and that HBR article where McGregor said ” . . . the task before us is clear.  We must find a new plan – not a compromise to hide the dilemma, but a bold move to resolve the issue.” In McGregor’s words a new approach is needed that “shifts the emphasis from appraisal to analysis . . . (and) implies a more positive approach” . . . the employee is “no longer being examined but being the examiner” and “becomes an active agent, not a passive object”

Douglas McGregor was uneasy with where Performance Appraisal was going and made a number of suggestions for how things could be better.  Many of these remain the espoused fundamentals of the systems and processes in use by organisations now.  McGregor’s thoughts on improving the performance process were:

  1. Ensure there is a clear statement of the major features of a job that defines the broad areas of responsibility jointly agreed by the manager and employee.
  2. Employees should establish their own specific short-term goals/targets including the intended actions proposed to reach them, targets are then agreed with the manager.
  3. At the end of the performance period the employee conducts a self-appraisal, ”substantiated with factual data” and
  4. Managers and employees review performance together and reset targets for the next period.

Like I said, it sounds like the basis of most performance frameworks we see.  However it is our observation that HR seems more obsessed with forms and process than with the culture of performance and the mindsets of managers and employees.  This was where McGregor through attention needed to be focused.  These excerpts from article are proof in point:

On systems/process/forms: “The particular mechanics are of secondary importance . . . no universal list of rating categories is required”

On the role of the manager: “Of course, managerial skill is required.  No method will eliminate that.  This method can fail as readily as any other in the clumsy hands of insensitive or indifferent or power-seeking managers.”

On the real investment required: “There is an unavoidable cost:  the manager must spend considerably more time in implementing a program of this kind.  It is not unusual to take a couple of days to work through the initial establishment of responsibilities and goals with each individual and a periodic appraisal may require several hours rather than the typical 20 minutes.”

From our perspective, there were three underlying messages from Macgregor’s 1957 article that still hold true today for what has to be present for a performance management process to work;

  1. Engage every participant in the process by helping them understand what it means to take real accountability.  For employees, writing outcomes-based objectives is easier when you know what you want to stand for.  For managers, holding people to account for outcomes they have defined themselves is a more attractive proposition than the alternative.
  2. Simplify your process down to each employee having a very limited number of specific outcomes they need to achieve in a defined performance period.  In reviewing outcomes it should be possible to answer the question “Did you do it?” with a simple “Yes” or “No”.
  3. Invest time in doing it right.  Getting really clear on a few key outcomes is an iterative process that takes time.  As should a decent discussion at the end of a review period; probably an hour or two. The challenge for HR is to create the conditions in which managers and their team members want to spend the time to get the most from outcome planning and performance reviews.

So, it is nearly sixty years since Douglas McGregor pointed out the factors likely to reduce the effectiveness of a performance management process, yet many organisations it seems are yet to heed the message.

If you want a performance process that delivers individual objectives linked to organisational outcomes and, that drives employee development, think first about how you will develop the mindset of accountability in every employee and encourage a willingness in both manager and employees to take the time to set real outcomes-based objectives and engage in a candid performance dialogue.

What do you think?  Where is your organisation at on the current performance management debate?  We welcome your ideas and insights.

Moreover if you would like to engage in a conversation about performance management in your organisation, drop us a line and we arrange to talk.

Justin Miles
Partner, Melbourne
Generator Talent Group
justin.miles@generatortalent.com


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