The Skinny on Performance

Most managers like giving performance reviews about as much as getting a root canal surgery.  Ditto with being on the receiving end.  Early in my career, I was charged with developing a new performance appraisal system for a regional bank.  The current system was not working: it demoralized people; it did not measure performance that was related to the business of banking.  In fact, there was even some evidence that it decreased performance.  Not a good thing.

This old appraisal focused on characteristics that were pretty much impossible to measure:  shows initiative, team player, excellent customer service, and acts with integrity.  These characteristics are difficult to measure unless one establishes at the onset, what specific measures relate to high initiative, high team player, high customer service, high integrity.  More to the point, one could argue that these are really values, not measures of performance.  Often the two are confused when it comes to performance appraisal.  Imagine if Wall Street evaluated a company’s performance on its ability to show initiative.  I think it would be pretty much impossible to arrive at a coherent valuation.  Why should performance appraisals be any different?

Since performance appraisals based on values are notoriously difficult to measure, they are doubly difficult to give.  How can I say an employee is acting with high integrity versus average integrity?  And how can I be sure that my employee on the receiving end will ever be in agreement with such a subjective measure?  Typically, they are not. And so, because of the inherent conflict in such a scenario, most managers avoid the performance appraisal meeting. If it cannot be avoided, then they will do it once a year. This is known as the dreaded annual performance appraisal meeting.  Now think about this. If the purpose of the performance appraisal meeting is to provide feedback to improve performance, how can that occur if feedback is provided once a year?  Quite simply, it can’t.  And more often that not, it actually decreases performance.  No wonder Dr. Deming, the father of the quality improvement process, was dead set against performance appraisals.

However, let’s don’t throw the baby out with the bathwater.  Performance appraisals do have their place, and can be a very useful tool in shaping behavior and improving performance.  Let’s look at some principles that will make this so. 

First, performance appraisals should be related to the business at hand, and specifically to the employee’s responsibilities.  If your employee is responsible for making house calls to repair appliances, then her performance appraisal should reflect that.  One measure that comes to mind would be the number of times the employee is called back to fix the same problem. 

Second, appraisals should be measurable in concrete terms.  If customer service is a responsibility, it could be measured by the number of complaints lodged against the employee, the number of times the employee is specifically recommended by a customer, or the number of times the employee is asked to return to fix other problems.  One could even use a customer feedback report to obtain data that would be useful to measure customer service performance.

Third, employees should be part of the goal setting process including performance measures.  As I’ve stated earlier in this column, people support what they help create.  If you involve your employee in setting goals for his/her performance, AND the measurement of those goals, they will be much more likely to achieve those goals.  Nobody likes goals being forced on them without any input.  And when that occurs, the goals typically are not met.  In fact, the phenomenon known as subtle sabotage often ensues.

Finally, performance appraisal meetings should not be reserved for an annual event.  If you have a performance appraisal meeting and your employee is surprised by the appraisal, then you have failed in your job as a manager.  In short, in the words of Donald Trump, you should be fired, not the employee.  A more effective way to improve performance is to have quarterly meetings, the focus of which is upon the progress toward meeting the goals as described by their inherent measures.  Using this approach, the meetings take a tone of problem solving instead of ego bashing.  And, performance actually improves.  Imagine that!