Performance Appraisal: A Necessary Evil?

Over the last two decades of my career, I have gone through performance appraisal process several times. However, I never questioned it, at least not seriously enough!  A spontaneous question from my son the other day, “Mamma, when are you getting your report card?” got me seriously thinking about it. He was aware of my anxiety before the performance appraisal, I had confided in him the day my performance review meeting was scheduled. Being a school going kid, he experiences the anxiety and tension every year before the report card is handed out in parent teacher meet. This simple question from him triggered a series of questions in my mind.

 Is year-end performance appraisal equivalent to handing out a report card? Is it really required? What does it help achieve? Who does it really benefit? Can organizations do away with it? Is there a way to manage it better?

 ‘Meritocracy’ and ‘differentiation of talent’ are commonly used terminology across organizations. Thus, performance appraisal definitely helps organizations differentiate talent by giving differential variable pay, increments, stock options and the like. Challenge lies with the other set of stakeholders – the employees. More often than not, employees do not agree with the performance rating given by their managers. They are unhappy with the rating and the resulting variable pay, increment and other financial benefits. Thus, it’s no wonder that there is always a surge in employee resignation post the performance appraisal and increment cycle. Some may call it a blessing in disguise as the poor performers quit. However as we all know, that’s not always the case! Organizations end up losing many more, probably even those employees whom they want to retain.

This difference in opinion between manager and employee about the performance happens due to multiple reasons; few critical ones being:

• Managers lack of awareness about the work being done by their employees.  This may seem surprising, but it’s a reality for many managers, especially in matrix organizations. They have an incomplete, if not a sketchy view of their employee’s performance.
• The whole process is post facto – a goal is successfully completed say in October and performance appraisal happens in March, six months later. The memory of previous achievement fades in view of another goal which was probably not well achieved in February. In HR terminology, it’s called ‘recency effect’. And it’s real! All managers are aware of this effect, but few are successful in overcoming it.
• Year-end phenomenon – It’s not uncommon to hear employees say, “If I was not performing well or as per your expectation, why tell me at the end of the year? I should have been told when I could have done something about it. Why am I told now when I can do nothing?”
• Lack of clear goal setting – this is a recipe of disaster, unfortunately it is not rare.

 Can something be done about it? Is it possible to close the gap, if so, how?

 I remember working with a manager several years ago. I worked with her for little over 2 years, thus she did my performance appraisal twice. One thing that stands out about this period is the ‘total lack of suspense’ during performance appraisal. I knew exactly where I stand even before I went for the performance review meeting. One year she rated me excellent and another year it was just ‘meets expectations’. Both the times, I had concurred with the rating – there was no heart ache!

The secret to this was the constant feedback that I received from her. Throughout the year, I received realistic feedback on several aspects like how I was doing on my tasks / goals, what was going well, what was not, how I can improve, where I should improve, her expectation from me etc. Sometimes, I used to get positive feedback and sometimes I used to get negative feedback – but at all times, irrespective of the feedback, I was motivated and happy. This constant feedback helped me improve my performance throughout the year. I had meaningful conversations with her throughout the year. As a result, end of the year, I knew exactly how I performed and where I stood. For that matter, in those two years, going through performance appraisal was a mere completion of HR process. Between me and my manager, it was a continuous year long discussion on performance and on-going coaching.

 Organizations may not be able to eliminate year-end performance appraisal process. But, what my previous boss did is an easy and simple way to close the perception gap between employee and manager. It’s the responsibility of every manager to provide ongoing feedback on performance and coach the employee to perform better. Every manager needs to ‘own his people, their performance and develop them to be successful’. Unfortunately, managers have a tendency not to give feedback, either positive or negative, but mostly negative. There are inherent fears and worries that refrain them from giving feedback.

 It is difficult to implement this as a process. Several organizations have included half–yearly performance appraisal as a process. But, it ends up becoming a replica of year-end process. After all, systems and processes can only achieve so much. This needs to be driven by individual managers.

 As a new financial year begins and the goal setting process begins, as managers let’s pledge to shelve our apprehensions and fears. Let’s dive into an on-going feedback and continuous coaching dialogue with our employees. I am confident that we will experience a completely different year end performance appraisal cycle!