Submitted by SmoothJazz on
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I have worked for four different companies in my 23 year career and have been an owner/partner in two of these ventures. All have had less than 200 employees and the smallest had 50. All were successful. None of them had formal appraisal systems and I don't understand all the fuss in Manager-Tools about performance appraisals. What I do know from those I have talked to is that non one seems to get it right (except maybe Welch and GE) and it really is much ado about nothing.
In the organizations I have worked for feedback and coaching have been the hallmarks of performance management. I have never had nor given an annual review and not only have I had career success but the individuals who have worked for me were either successful in their role or clearly understood why they needed to look for other employment. Yes, I have had to fire about a dozen people over the years but none has ever sued me or called me unfair because they knew where they stood -- every day.
So please explain to me, why is their much ado about review.....
Much Ado about Review
Smooth
I think you have been very fortunate.
Most of the managers I have worked for have only given feedback at annual review time - it's the only time you have to find out what they really think, and get your argument in for being properly rewarded for the efforts you have put in.
It does become blown out of proportion in those circumstances, I'll agree.
Wendii
Much Ado about Review
If you've always worked in small companies, then its very possible that you haven't seen or had the need for performance reviews. Look at it from an old school big-business viewpoint and it becomes a little easier to understand.
Its budgeting time. You want to reward the people that are under you, so you set aside X dollars for raises and bonuses. Budgets are approved and the new fiscal cycle start. How do you split up the budget for those raises? Enter the performance review. Your organization is too large for you to know the details of each performer. So you use a system where the best people can be more easily identified. Its not perfect, but it seems to work.
There's the need - because businesses are so large that managers who allocate funds don't know everyone. As you say, almost no one does performance reviews well, but that's a symptom of bad management, not an indictment of performance reviews in general.
Brian
Much Ado about Review
and in well-run companies, performance reviews are also the foundation for professional development and promotion/succession planning. These activities are often ad-hoc in small companies.
John
Much Ado about Review
SJ,
I expect your past success has a lot to do with your ability to make sure your people “know where they stand—every day.” That is a great quality. This is the foundation of the Manager-Tools trinity: feedback, one-on-ones, and coaching. That is what they make much ado about. The rest, including performance reviews, are additional tools that can be used in the right circumstances: the right tool for the right job.
It may be that part of the reason you have seen that no one seems to “get it right” is that no one system works for all situations. Even [url=http://www.manager-tools.com/forums/viewtopic.php?t=1598]the Welch/GE system has its critics[/url]. I couldn’t tell you if it’s best for small organizations to use performance reviews. However, it seems that implementing a system similar to GE’s into a small organization is like trying to break an egg with a sledge hammer. I may be biased. :)
I know M-T has a simple form for performance reviews; I’ve not used it. Perhaps others might share. Mark has suggested using the M-T form to build the review, even when there’s a larger corporate “form” that has to be followed, as well.
Good luck!
CC
Much Ado about Review
I appreciate your comments but I am not so sure that performance reviews are needed even in a large company. If compensation or reward is the justification then managers will -- and do -- rate people according to their subjective criteria. In other words, the people they like and to whom they want to provide a good raise will get a better rating. If comp is the reason, then ask managers to provide an excel sheet with their people's ratings and leave it at that. Research on this stuff is pretty clear. Most managers suffer from appraisal leniency where there provide higher performance ratings than the employee objectively deserves.
You may now want to say that this is not a problem with appraisals but of the manager so let's just fix the system. Many people believe that errors in performance appraisals can be eliminated. But again, research just doesn't show that to be true. As a matter of fact training that is offered to eliminate an error often introduces other types of errors because managers are well aware that they do performance appraisals poorly but continue to do so for personal and social reasons.
Let's let managers off the hook on reviews but hold their feet to the fire on feedback and coaching.
Much Ado about Review
I look back on my previous post and realize it is rather weak. Let me suggest an additional benefit of performance review - annual documentation of an employee's performance, so you can refer to it years from now when the question comes up "how is he doing?" That question has an element of the instantaneous to it, but also a historical aspect.
I understand what you're saying. This is the same argument as whether we should have report cards for children in schools. Why can't children just learn?
As to letting managers award perks as they see fit; not a bad idea in smaller companies, a very bad idea in large organizations. Also, there is a subtle shift to what you're giving the incentive for; is it for producing superior results or is it because the boss likes you? Employees aren't dumb and they will perform to what you give incentive to. If they clearly see that the boss's favorites get the perks, then kissing up to the boss becomes the behavior.
Brian
Much Ado about Review
SJ,
[b]BLUF:[/b] Performance appraisals are a somewhat imperfect means of measuring performance over time. What gets measured, gets managed. (Druker) This is about motivating employees to better performance.
You have a strong point with respect to subjectivity of reviews. I remember having a conversation with a friend of mine about how much our review process lacks objectivity and is very biased. This was right after I get a review that was below my expectations.
Do I think all the flaws in the system can be fixed? Not really...it's too organic. However, I wouldn't throw the baby out with the bathwater. Just because a system has some problems, doesn't mean it doesn't add value.
The value from performance reviews is more than just determining raises. When I was upset before about that "biased" review. My concern was less about actual dollars than it was about that my boss thought that I had poorly performed in a situation I was actually proud of. In this case, as well as many others, motivation to change behavior had little to do with money and more to do with other factors such self-actualization (personal value to the company). (See [url=http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs]Maslow's Hierarchy of Needs[/url])
Having a written record of performance not only provides justification to the "numbers," it also provides another method to communicate to the employee about performance.
One last point, given that time is finite AND that there is some (high?) limit to the value of perfomance appraisals, I do think that there are cases where not doing performance appraisals can be justified; however, that would be the exception, not the rule.
CC
documented performance
I would like to echo ccleveland's comment about documenting performance. I think that coaching, feedback, etc. is all great. However, there is something about having performance formally documented in a consistent manner for communicating performance which allows me to have a full snapshot of how I am doing overall (both good and bad) rather than individual points that come up in a feedback or coaching session.
I would guess that my directs would feel the same way.
Much Ado about Review
I agree as well that documenting performance is an important aspect to consider. Years down the road, this would be helpful. Yet, without beating the drum too much again, let's be real about what this annual format is all about, documenting a manager's perception of performance -- not a methodology of providing "feedback" which is all too common amongst management.