A History of Performance Appraisals: Letting Go to Power New Culture

Performance ratings are part of ancient, really ancient, history.

Are we ready yet to let go of individual performance appraisals (reviews, evaluations) to fully embrace achievement-oriented, team cultures?

Or is the individualistic command and control culture of the Great Britain and American industrial age too much a part of the problem?  This SlideShare illustrates it:

Performance management, defined in the 1970s, is rooted in scientific management.  It is possible to acknowledge history, realize its impact on our business systems, and let go to embrace new strategies?  Can we do it?

What to Do Instead:

An innovative group named the BetaCodex Network, founded in April 2008, offers a number of specific suggestions  for an updated, less hierarchical approach to finance and human resources.   Here are a few highlights:

• Focus on team achievement
• Focus on connectedness and information/intelligence flow* 
• Have a few, key indicators (metrics) collected by those who need it
• Use gain-sharing or profit-sharing, never individual bonuses or financial incentives
• Use positive peer pressure to empower achievement, helped by sharing team results
• Disconnect compensation from performance targets

 * This reminds me of recent research on high performance giving / receiving cultures

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“We live our lives in webs of interdependence and yet we keep telling ourselves the story that we are independent.”

~ Peter Scholtes

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Authors Peter Scholtes, Tom Coens and Mary Jenkins have published books informed by W. Edwards Deming’s work.  In the Coens & Jenkins book, Abolishing Performance Appraisal:  Why They Backfire and What to Do Instead, the authors recommend practices including:

• Foster a work culture where feedback is integrated into day-to-day work*
• Adopt profit or gain-sharing practices that equitably benefit everyone when the overall organization is successful
• Encourage and train people to be responsible for their own development and personal growth

* Feedback can also be, simply, data delivered directly to those who can best use it to self-assess performance, including teams

Project Teams & Compensation, Retention Tactical Challenges:

As organizations becoming more team based, companies will tend to act in their own interest at the expense of staff development, causing early career plateauing.  The tendency will be to use staff skill sets repeatedly for immediate needs in a VUCA setting (Volatile, Uncertain, Complex Ambiguous), versus providing staff development opportunities.  This will eventually lead to talent losses.  To counter this in team & project oriented organizations, the Corporate Leadership Council (CLC) suggests team transition advisors to help staff develop as well as managers seeking talent for teams.

It is also important to balance responsibility and compensation in teams, especially for self-managing teams. A CLC report relays that team performance problems can occur when profit and gain-sharing programs lack a line of sight. Team members can lose sight of how their actions affect the organization’s productivity and their own, team’s compensation.   Research on team failures cite team and organizational goal disconnects as well as territoriality by executives affecting performance results.

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“Since we have started using [team based gain-sharing], my outlook …has changed.  We no longer work in a check-your-brain-at-the-door company.  My opinions are valued and, more importantly, I am paid for the impact my team has on the business.”

~ Factory worker, Smith Company

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With attention paid to supporting team achievement, as well as practical planning for retention by countering skills and career plateauing, organizations can lean into new team-based achievements and retain great talent.  This CAN happen while discontinuing industrial age, low value and disliked performance appraisal practices.   If letting go creates more space for creativity, innovation and higher productivity, as is likely to happen, everyone achieves more in the freed up time, everyone wins.

Note:  The SlideShare above and references here are intended to provide additional context and specifics for my MISHRM 2013 presentation on “From Chaos to Creative: Performance Development in a VUCA World” in Grand Rapids, Michigan, October 8th, 2013 | 2:00 PM – 3:15 PM

See the photo set here that captured the Open Space portion of this session that happened on October 8th.

For notes and the full references from this presentation, see the  From Chaos handout here .

References:

At the Fault Line: the Struggle to Align Individual and Team Interests – Softcover  (1996). by Corporate Leadership Council

Coens, T. and Jenkins, M. (2002).  Abolishing performance appraisals: Why they backfire and what to do instead.  San Francisco: Berrett-Koehler Publishers Inc.

Pflaeging, Niels (2009)  White Paper:  Making Performance Work: From fixed to relative performance contracts, and towards simple, ethical and empowering ways of dealing with performance, (Valérya, Gebhard and Andreas) BetaCodex.org

Scholtes, Peter R. (1997). The Leader’s Handbook: Making Things Happen, Getting Things Done. McGraw-Hill

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