lady working on a laptop

Throwing out the Appraisal Rating

An unfortunate definition of an appraisal:

Where the manager gets no sleep the night before and the employee gets no sleep the night after

Finally large organisations are starting to rethink how they do performance reviews. And that might do a lot to help their employees’ mental health too.

In recent years, giants like Microsoft Corp. and Eli Lilly & Co. have dropped the standard model of performance reviews where an employee meets with a manager once a year and gets a rating. They’re moving toward setups where bosses and workers have frequent, low-pressure conversations about performance and expectations, and they’re ditching ratings in favour of more nuanced ways to judge performance.

I have to say the Appraisal or as John Oliver might put it ” The giant Swiss army knife of unworkable HR processes” has been tinkered with for the last 20 years and still remains highly problematical. According to data gathered by leading Human capital research organisations:

  • 8% of HR Executives thought performance management made a significant difference to performance Institute for Corporate productivity
  • 14% of HR Executives thought performance management needed no change (Corporate Executive Board)
  • 23% of HR Executives thought that current performance systems reflected employee’s contributions (Conference Board)

And contemporary neuroscience is pouring more fuel on that fire by presenting evidence that appraisal ratings jolt employees into a flight or fight scenario whilst switching off more flexible solutions- orientated thinking. They might also be unintentionally be reinforcing Fixed rather than Growth Mindsets (Carol Dweck)

Read more in the following Wall Street Journal Article 

“The employee may not say anything overtly,” the researchers wrote, “but he or she feels disregarded and undermined – and thus intensely inclined to ignore feedback, push back against stretch goals and reject the example of positive role models.”

What’s more, the researchers found, performance ratings send a strong signal to employees that their performance is based on innate abilities, which cannot be improved.

Finally, the study shows ratings can blindside employees and affect performance. Of the half of all workers who are surprised at the rating they receive, 90% are unhappy, because they expected a higher rating. Those displeased workers have a 23% drop in engagement, curtailing “collaboration, innovation and agility,” says Mr. Rock, the head of the Neuroleadership Institute.

For many companies, the spur for change was realizing that the old performance reviews took a big toll in morale.

In July, health insurer Cigna Corp. jettisoned its performance-rating system. The company realized staffers were fighting to prove they deserved the best grade, which only a certain number could attain, and were disappointed when they got lower ones.

Now, formal evaluation meetings and ratings are gone, and managers are encouraged to have frequent conversations that mainly involve coaching staffers to help them up a career ladder. Karen Kocher, chief learning officer, says: “Employees are saying, ‘This is the first real honest conversation I’ve had with my manager about me, about what I should do, instead of these goals that aren’t really related to me.’ ”

At Microsoft, a mandated ratings curve meant most employees received the middle ranking on a 1-to-5 scale. That caused angst, says Lisa Dodge, director of global performance programs: “We hired all-their-lives A students, and they felt they were getting a C.” While data showed employees thought they were paid well, the system fostered an obsession with the ratings.

Microsoft now has managers schedule more frequent conversations about what impact the employee has had and how to do better. “The lack of rating, we have heard back from our people, mitigates the threat, distraction and internal competition,” Ms. Dodge says.

To be sure, the vast majority of big companies are sticking with traditional ratings. And some that have switched say there are problems with new methods—such as properly rating performance. Some have said “they haven’t been able to get away from shadow rankings,” says Paul Rubenstein, a partner in the Leadership, Talent Strategy and Assessment practice at benefits-consulting firm Aon Hewitt.

He argues the best move is to keep rankings but teach managers how to have useful conversations, focusing on how employees can do their jobs better and work better with others.

Ms. Schoenberger is a writer in New York. She can be reached at [email protected]

The approach to performance management

I would imagine that most companies would like their employees to learn from feedback, benefit from stretch goals, be intrinsically motivated to master their work, value effort and model other people’s success. These should all be the natural result of performance management systems.

Yet our current approach to performance management tends to do the exact opposite because of the way goals are set, feedback is given and how people are measured.

Changing this requires educating people about the growth-mindset concept, priming a whole organization to believe in and focus on the idea that people can grow, at every level.

I know it sounds a little naive focus more on supporting and not judging but could it be any worse than continuing to doggedly pursue our current flawed performance management models?

Neuroscience and the practice of a few pioneering organisations suggest it could be a great deal better.