10th July 2014

Another Uneasy Look at Performance Appraisal


The May-June 1957 issue of Harvard Business Review (HBR) included an article by Douglas Macgregor entitled An Uneasy Look at Performance Appraisal.  Macgregor identified issues in the practice of performance appraisal at the time and made suggestions on how the process and practice of managing performance might be improved.

Given the article turns 57 this month and since it’s the time of year so many organisations perform the annual rites of end of year performance reviews, it’s worth a quick reflection on Macgregor’s classic 1957 work to see if there’s still something to learn.   

The source of Macgregor’s unease. . .

“Performance appraisal within management ranks has become standard practice in many companies during the past 20 years and is currently being adopted by many others, often as an important feature of management development programs. The more the method is used, the more uneasy I grow over the unstated assumptions which lie behind it.”

So said Macgregor as he introduced a management paradox.  Managers, it seemed, saw the logic and necessity of having appraisal processes, yet those appraisal processes were running into resistance by those same managers supposed to apply them.

On resistance managers to fully engaging in the appraisal process “resistance is usually attributed to the following causes:

  • A normal dislike of criticising a subordinate (and perhaps having to argue about it).
  • Lack of skill in handling the discussion
  • Dislike of a new procedure with its accompanying changes in ways of operating
  • Mistrust of the validity of the appraisal instrument

On ensuring compliance to the process: To meet this problem, formal controls – scheduling reminders, and so on – are often instituted.  It is common experience that without them fewer than half the appraisals are actually held.”

On management skill: “The approach (by managers to appraisal), unless handled with consummate skill and delicacy, constitutes something dangerously close to a violation of the personality.  Managers are uncomfortable when they are put in the position of “playing God.”

On providing training support to overcome resistance: “Training programs designed to teach the skills of appraising do help, but they seldom eliminate managerial resistance entirely . . . . there is always some discomfort in telling a subordinate he is not doing well”

In recent client discussions its clear there is still widespread organisational disenchantment with performance processes along the same lines Douglas Macgregor identified 57 years ago.  HR leaders still feel they have to champion the process, cajole people into participation and use whatever positional power they have to ensure compliance.  Many it seems, are still looking for a silver bullet.

Does your performance management process add material value your organisation? 

Think about this:  Would your organisation have achieved the same results last year without your performance management process in place?  If you answered ‘Yes’, you either need to drop it as an irrelevant process or reinvent it in a format that ensures it adds value.

Macgregor’s “New Approach”

” . . . 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.”

Douglas Macgregor was uneasy on where Performance Appraisal was going and made a number of suggestions for how things could be better.  Many of these remain the fundamentals of the systems and processes in use by organisations now.  Macgregor’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.  These 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”
  4. Managers and employees review performance together and reset targets for the next period.

In Macgregor’s words this approach “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”

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.”

The real message in Macgregor’s Article

So Douglas Macgregor proposed all this in 1957.  Many of us will say that our performance management processes are built on exactly these fundamentals which is true.  However to my mind there are three underlying messages in this Article that still hold true today;

  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 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.

Our summary

It is 57 years since Douglas Macgregor 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.

Justin Miles
Managing Director – Melbourne Office
Generator Talent Group


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