Performance appraisals don't work!

Recommended Reads:
Gray, G. (2002), ‘Performance appraisals don’t work’, Industrial Management, March/April.

Gray’s article ‘Performance appraisals don’t work’ (2002) is a paper which says that the process of conducting performance appraisals does not elicit the desired behaviours required from employees in the workplace. As a HR professional- you scream- but why not?!

Gray argues that most managers are ill-equipped to carry out the task at hand and questions how a system can be objective, consistent and dependable if the manager executing it lacks the appropriate skills or training.

This is highlighted by a study undertaken by Coutts & Schneider (2004) which looks at the effectiveness of police officer performance appraisal systems in Canada. In this article, it was discovered that in terms of the perceived extent of performance appraisal training provided to supervisors who conducted performance feedback and appraisals, 21.6% of the participants indicated that there was no training provided, 67.3% indicated very little training was provided, and only 11.1 % indicated that substantial training is provided.

They argue that performance appraisal can only be as effective as the “task-relevant skills and knowledge” of those responsible for using it. Suggested skills that managers need to be trained in include their observational skills, how to reduce judgemental biases and how to provide meaningful and constructive feedback.

However, most interestingly Gray asserts that if performance feedback is used by organisations in the performance appraisal process this automatically means that a large proportion of the company’s employees are ‘average’ if they stick to a traditional bell curve or a forced ranking methodology. In this seemingly totem-pole process, each person gets a unique ranking against other employees in the business unit or function, whilst the bell curve system distributes employees into particular bands or categories (Loren. 2001). The inadequacy of this system is highlighted by the statement “only a few people can be best performers. Similarly, some people have to be slotted into the lowest rank, even if their performance, using a competency-based assessment, is satisfactory” (Loren. 2001).

Hence, a large proportion of employees under a bell curve or ranking method will be told they are ‘average’ and their development conversations will be based around this grading in the performance appraisal. Subsequently, this is neither accurate nor effective performance feedback, adeptly illustrating Gray’s (2002) main argument that performance appraisals don’t work.

Gray’s article is frank about the downfalls of many performance management systems and rightly so. These issues identified by Gray are ones that are currently being experienced by many organizations in contemporary society and it identifies areas for improvement and why current systems fall short.