Performance Appraisals

Last week I had dinner with Jerry, an Agile Coach friend of mine, who is currently working in a mid-size company of about 2000 employees that is starting its “Agile” transformation.

As part of the transformation journey, a new performance management process is being defined by HR in collaboration with some external consultants. And Jerry was telling me how upset he was with what he was witnessing.

Both Jerry and I have gone through this several times in our careers and we had a very interesting conversation that got better as the wine kept flowing.

Let’s be clear. Nobody likes performance appraisals. People say it is a waste of time and they do it because they are told. Why do organizations insist in practicing individual performance appraisals?

Perhaps, because:

  • It improves overall organization performance
  • They need some mechanism to evaluate salary increase and bonuses
  • To align people to organization strategy
  • To motivate people
  • To help individuals improve
  • To provide feedback for improvement
  • Everyone else is doing it

How do they know that performance management has any impact on those items above? What does scientific research say about this? Couldn’t those just be beliefs and superstitions?

None of those assumptions are true or have ever been demonstrated. There is no evidence that performance management has any positive effect in organization performance. All the contrary, I must say.

Motivation & Performance

It’s fascinating how most organizations are ignoring science and research on human motivation and performance, and they still apply practices developed at the beginning of 20th century which foundations are based on the context of the industrial revolution and Taylorism.

Over the last 30 years advances in neuroscience, psychology and systems thinking have put Performance Management up against the ropes. Whilst several big players are giving up most are still doing it.

I wished that by 2015 everyone would have read Daniel Pink’s book “Drive” and understood the message. But, it doesn’t seem to be quite the case.

The summary of https://vimeo.com/15488784 is that monetary rewards to knowledge workers decrease performance and motivation. In other words, do not link salary increases to performance of knowledge workers unless you want to harm your business.

Individual Performance

From Systems Theory and Complex Systems Theory we can argue that there is no such thing as individual performance in organizations, therefore you cannot measure and reward it. The level of complexity and interconnectedness of an organization makes it really difficult to assess causality. Thus, you cannot tell if something happened because you did something, or because you didn’t do something, or because someone else did something, or because of market forces or because something happened two years ago and now we are suffering the consequences with delay.

Rewarding individual performance can destroy teamwork, nourish politics, unethical behavior and competition. In words of Edward W. Deming, performance management “nourishes short-term performance, annihilates long-term planning, builds fear, demolishes team work, nourishes rivalry and politics.” And you know what?, I do trust this guy, because he was key in the resurrection of Toyota and Japanese industry after WW2.

How does it sound put this way? “We are spending time and money to measure something that cannot be measured and by doing so we are jeopardizing the future of our company and killing motivation”. Awesome !!!

Management

In my experience managers are being promoted by the wrong reasons. When someone has done a good work in their area they are promoted to managers, without any training or experience in leadership or coaching whatsoever. This is most relevant in engineering, where the average population has very limited interpersonal skills, emotional intelligence and self-awareness.

Some surveys show that almost 70% of the workforce in USA don’t trust their boss. And I don’t think it is much different everywhere else. People don’t like to be evaluated nor want to receive feedback from someone they don’t value. Do you think employees care much about their manager’s evaluations and feedback?

Why don’t we turn the ship around and have everyone evaluate the performance of their manager? Why do not managers focus on building positive relationships and develop themselves as servant leaders instead of telling people what to do?

Feedback

Remember last time you were receiving feedback? How did you feel? Did you feel something similar as if you were going to speak in public perhaps? Well, that’s normal. Receiving feedback activates defense and threat mechanisms in our brain that inhibit learning. This is also known as threat rigidity in psychology and, it has been explored at multiple levels of analysis, showing that threat has the effect of reducing cognitive and behavioral flexibility and responsiveness, despite the implicit need for these to address the source of threat.

People tend to act in ways that inhibit learning when they face a potential threat or embarrassment. It means that no matter how well you give feedback, recipient will most probably be in defensive mode with a high level of emotional arousal that will inhibit learning and listening attentively.

People don’t like receiving feedback and nor like those who they are receiving feedback from. 

However, there are ways in which we can create a feedback friendly culture. Learning how to receive feedback and how to provide feedback are just the first steps. But, only those people who care about themselves and about their future will be willing to accept feedback.

What could organizations do different?

  • Make sure salaries are adequate and get that off the table
  • Separate salary increases and bonuses from individual performance for knowledge workers
  • Make individual goal setting optional and support those who want to participate with coaching and mentoring. Properly implemented Google’s OKR is a way of doing it, but there are many others
  • Performance is something you cannot manage but you can set the conditions in place for performance to emerge: teams, education and training, information systems, transparency, purpose, vision, working agreements, coaching, mentoring and leadership are some of the key leverage points.
  • Reward system must provide recognition and positive consequences for excellent team performance
  • Peer pressure works much better than management command-and-control in teams
  • Mastery, autonomy and purpose are real human motivators regardless of the task at hand
  • Hire people who cares about their own development and progress and support them with coaching and mentoring

I’d also like to recommend the book Luis Gonçalves, an Agile Coach friend of mine, is writting about the subject matter.

Summary

  • Monetary rewards to knowledge workers decrease performance and motivation
  • There is no such thing as individual performance in organizations. Individual performance is an oxymoron
  • People don’t like receiving feedback
  • People don’t like those who they are receiving feedback from
  • People don’t want to improve

Thanks for reading and commenting!

Gerard.

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