For a while now there’s been overwhelming evidence that Performance Appraisals don’t drive performance, in fact they may have the opposite effect.  

If your organisation is still using performance appraisals here are some questions that may help influence and shape your thinking:

  • Are the objectives of your performance appraisal process being realised (eg, increased productivity, people engagement, performance improvement)?
  • How much is it costing your organisation every year in lost productivity, due to the time and resources being tied up in the appraisal process?
  • Have you done the math (Benefit – Cost = Value)?
  • Do your people, both leaders and their direct reports, enjoy the process? 
  • Does your appraisal process motivate the majority of your people to unlock their potential and discretionary effort?
  • Can you accurately and fairly measure individual contribution and do biases, both conscious and unconscious, skew the outcome?
  • Have your individual performance incentives ever undermined good teamwork – i.e. team members competing with each other, or putting their own interests above those of the team?
  • Have your individual performance incentives ever driven other undesirable behaviour – i.e. manipulation of results, mis-selling, dishonesty, bending of the rules etc?

So why do organisations persist with appraisals?  I’m not sure, but maybe the process has just become a very entrenched organisational habit (what we do around here).  Some organisations may like being able to neatly and conveniently ‘rack and stack’ their people based on performance ratings (at its worst this is also used for forced ranking). Or, maybe it’s as simple as not knowing what to replace it with, and seeing creating something new as too hard.

The good news is there are already progressive organisations out there  who have successfully ditched performance appraisals.  Instead they focus on strengthening leadership, building awesome teams, regular quality coaching, paying fair base salaries, regular employee appreciation (recognition) and sharing profits.

There’s no better time than now to start work on reviewing your performance appraisal process. For more information on how Greater Than can help you contact us at info@greaterthan.nz.

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