You know the feeling. All day you have been distracted by that
2pm appointment on your calendar; "Annual Performance Appraisal with
Supervisor". Your palms are clammy, your thoughts are distracted and you
find yourself questioning whether your boss really knows your true
value and what you accomplished this year.
In
many organizations, the annual performance appraisal is tied to merit
pay increases and possibly future promotional opportunities. When
supervisors look to promote from within, often the first question they
ask is "may I see the candidate's performance appraisals?" But are these
annual performance appraisals really the best source of data to measure
someone's promotional worth or merit increase?
To answer that question, let's first take a look at the timing. Annual performance appraisals take place annually, just as the name implies. This means that a supervisor should have been keeping records of all the positive contributions the employee made to the Company in the past year as well as all of the mistakes the employee has made over the past year. More often than not, the record of the employee's performance contains far more of the negatives from the past year rather than the accomplishments. Because let's face it, there is a far bigger need to keep records of issues than there is to keep a record of accomplishments in the mind of most managers.
Secondly, most supervisors have not been trained on how to write and conduct performance appraisals effectively. This lack of training, when coupled with a lack of oversight from a third party, can lead an employee to be reviewed on an incomplete and sometimes biased recollection of his/her body of work. Managers commonly make rater errors, not because they mean to, but because they don't know how not to make these errors. Included in these rater errors are the mistakes of:
Recency - giving far too much weight to a recent success or failure
Halo/Horn effect - looking at a minuscule sample of the total body of work and deciding the employee is either better than actual (halo effect) or worse than actual (horn effect).
Same as Me Effect - if the employee takes a markedly different approach, he/she may be reviewed more harshly for not doing it like the rater would do it.
Comparison Effect - comparing employees only to each other rather than to a pre-determined set of criteria. The best employee on a rotten team may be rated as a star when his/her performance may only be average compared to the job description.
Bias Effect - placing personal bias against an individual because of any number of reasons can affect the rating either way significantly. If the rater does not like people from cold weather climates, the individual's performance will have little bearing on the outcome of the performance appraisal.
Conflicting Messages - telling the employee all year that his/her performance is acceptable and then delivering a different message during the review process can erode the confidence the employee has in the supervisor and the company. This issue is much more common when the employee's supervisor changes during the year and rates the performance against a different standard than the previous supervisor used.
Critical Incidents - providing too much weight to a spectacular incident that occurred throughout the year. While it may work in the employees favor is the incident was positive, it can have devastating effects if the incident was negative.
In addition to these rater errors, timing of actual feedback can have a significant impact on actual employee performance. Feedback, either positive or negative, that occurs at the time of an incident or at the close of a project is far more effective in shaping employee behavior than feedback that is only provided once a year. This is especially true for younger workers in an organization who are accustomed to receiving immediate feedback from immediate rewards for most everything in their life.
From Facebook to Twitter to LinkedIn to drive-through's to microwaves, younger workers have been programmed to expect immediate feedback and immediate rewards. If praise is consistently not delivered when a success is achieved, the employee can begin to feel as though he/she doesn't matter. Conversely, if coaching feedback is not delivered, it loses its value of being applied to the specific discrepancy of performance.
For all these reasons, it is apparent that the annual performance appraisal, when used individually, is not only a poor tool to use when looking to make a promotional or compensation decision, but is also a poor tool to use when looking to impact employee behavior and performance. But I do not recommend scrapping the annual review process all-together. Rather, I promote using the annual performance review in concert with other tools:
By putting all of these tools to use in your Company, you will not only increase engagement of your employees, but you will also have the tools necessary to make better business decisions in regards to your people.
To answer that question, let's first take a look at the timing. Annual performance appraisals take place annually, just as the name implies. This means that a supervisor should have been keeping records of all the positive contributions the employee made to the Company in the past year as well as all of the mistakes the employee has made over the past year. More often than not, the record of the employee's performance contains far more of the negatives from the past year rather than the accomplishments. Because let's face it, there is a far bigger need to keep records of issues than there is to keep a record of accomplishments in the mind of most managers.
Secondly, most supervisors have not been trained on how to write and conduct performance appraisals effectively. This lack of training, when coupled with a lack of oversight from a third party, can lead an employee to be reviewed on an incomplete and sometimes biased recollection of his/her body of work. Managers commonly make rater errors, not because they mean to, but because they don't know how not to make these errors. Included in these rater errors are the mistakes of:
Recency - giving far too much weight to a recent success or failure
Halo/Horn effect - looking at a minuscule sample of the total body of work and deciding the employee is either better than actual (halo effect) or worse than actual (horn effect).
Same as Me Effect - if the employee takes a markedly different approach, he/she may be reviewed more harshly for not doing it like the rater would do it.
Comparison Effect - comparing employees only to each other rather than to a pre-determined set of criteria. The best employee on a rotten team may be rated as a star when his/her performance may only be average compared to the job description.
Bias Effect - placing personal bias against an individual because of any number of reasons can affect the rating either way significantly. If the rater does not like people from cold weather climates, the individual's performance will have little bearing on the outcome of the performance appraisal.
Conflicting Messages - telling the employee all year that his/her performance is acceptable and then delivering a different message during the review process can erode the confidence the employee has in the supervisor and the company. This issue is much more common when the employee's supervisor changes during the year and rates the performance against a different standard than the previous supervisor used.
Critical Incidents - providing too much weight to a spectacular incident that occurred throughout the year. While it may work in the employees favor is the incident was positive, it can have devastating effects if the incident was negative.
In addition to these rater errors, timing of actual feedback can have a significant impact on actual employee performance. Feedback, either positive or negative, that occurs at the time of an incident or at the close of a project is far more effective in shaping employee behavior than feedback that is only provided once a year. This is especially true for younger workers in an organization who are accustomed to receiving immediate feedback from immediate rewards for most everything in their life.
From Facebook to Twitter to LinkedIn to drive-through's to microwaves, younger workers have been programmed to expect immediate feedback and immediate rewards. If praise is consistently not delivered when a success is achieved, the employee can begin to feel as though he/she doesn't matter. Conversely, if coaching feedback is not delivered, it loses its value of being applied to the specific discrepancy of performance.
For all these reasons, it is apparent that the annual performance appraisal, when used individually, is not only a poor tool to use when looking to make a promotional or compensation decision, but is also a poor tool to use when looking to impact employee behavior and performance. But I do not recommend scrapping the annual review process all-together. Rather, I promote using the annual performance review in concert with other tools:
- Train all raters on how to effectively rate an employee's performance
- Train all managers on how to document the good as well as the bad that is witnessed over the course of a year
- Establish a vetting process to ensure oversight in to the review process to reduce rater bias and rater error
- Implement a coaching in the moment program to ensure all supervisors become excellent sources of immediate positive and constructive feedback
- Augment the annual review with a monthly touch base between the manager and the employee
- Ensure other metrics are utilized to verify the employee's true contribution to the success of the organization
By putting all of these tools to use in your Company, you will not only increase engagement of your employees, but you will also have the tools necessary to make better business decisions in regards to your people.
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