Why Performance Appraisals Fail

So, with a performance evaluation system in place, why do some performance appraisals fail?  There are many reasons for this:

• The manager is not adequately prepared.
• The employee does not have effective performance objectives at the beginning of the performance review cycle.
• The supervisor may not be able to observe performance or have all of the information.
• The performance standards are unclear or unrealistic.
• There is inconsistency among the various raters.
• The system is actually rating personality rather than performance.
• The halo effect, contrast effect or some other perceptual bias comes into play.
• There is an inappropriate time span (either too short or too long).
• Inflated ratings are given because supervisors do not want to deal with "bad news."
• Subjective or vague language is used in written appraisals.
• Organizational politics or personal relationships cloud judgments.
• There is a lack of discussion regarding causes of performance problems.
• There is no follow-up and coaching after the evaluation.
• The supervisor may not be trained in how to do an effective performance evaluation or in giving feedback.

Giving Feedback

In order for a performance evaluation system to be value-added, it is extremely important for managers to be trained in how to give appropriate feedback on an ongoing basis. This happens to be the No. 1 reason why the performance appraisal process fails. Once a manager has communicated their expectations to employees, they must take time to observe an employee's work and provide timely feedback on their performance.

Two types of feedback that a supervisor needs to provide employees with are motivational and corrective. Motivational feedback should be given immidiately after the employee has performed the task. This behavior on a manager's part is critical to encouraging and supporting the person. Corrective feedback should be given just before the individual does the task again. It is possible to give the employee both motivational and corrective feedback at the same time if the task will be repeated right away. However, when the task will not be repeated right away, they should be done separately.

A manager's feedback should be specific and focus on the behavior of the employee-not their personality.  It is important to recognize what the employee did that was important.  Many managers simply say to an employee, "Great job!"  How will the employee know what is being reinforced?  Managers must identify exactly what it was that the employee did and why it was so important.

Feedback needs to be balanced. It is critical not make the common error of glossing over an employee's deficiencies and focusing only on his or her strengths. Helping an employee to recognize deficiencies will help him or her to develop into a stronger person and a more valuable asset for the company. In order for a manager to provide credible feedback that is balanced, he/she must provide an environment where an employee has the tools and support system to take ownership for performance and make improvements in those areas required. And what will be the result? Employees will learn to take pride in their work and will be willing to take on more challenging assignments with confidence. 

Rewarding Performance 

One of the key goals of a performance evaluation system is administrative-rewarding performance with pay.  With a merit pay system, it may be appropriate and efficient to review an employee's salary at the time of the performance evaluation.  This alignment between performance and pay could make the company and its employees take the performance evaluation process more seriously and at the same time reinforce a pay-for-performance environment.  A separate discussion regarding a pay increase should be held to ensure the focus on the initial discussion is on performance and not pay.

Benefits of a Performance Appraisal System  

In the final analysis, an effective performance appraisal system will help an organization achieve its mission, vision, values and strategic goals.  Such a system can help an organization to:

• Hire employees that exhibit both the "how" and "what" of performance to ensure an organizational fit.
• Know how each employee's job can further the overall goals of the organization.
• Evaluate each employee as an individual and evaluate the employee's strengths and areas for further development.
• Reward key players to foster loyalty and motivation.
• Sustain high levels of employee morale through ongoing coaching and feedback.
• Identify the needs of the workforce to ensure employee retention and increase organizational productivity and creativity.
• Reduce the risks of complaints and litigation by ensuring employee's are treated fairly and consistently.
• Identify problem employees early on and either turn them into productive workers or lay the groundwork for discipline and, if necessary, termination.

When the day is done, this translates into better employee performance, which leads to increased organizational productivity and ultimately to higher profits. 

Also, remember that if the heart of the performance appraisal process is designed to improve employee performance, then managers must focus more on what the employee can do going forward, not just how the employee did in the past.  

Michael Duchon is a senior human resource consultant at HR Department Unlimited.  HRDU provides human resource and training consultation for employers. HR Department Unlimited is a monthly contributor to Construction Business Owner and can be reached at www.HRDUonline.com.

Tags: 2007 September Issue, communication, hiring, human resources, management,

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