3-way, 365 performance appraisal

Performance appraisal should be an ongoing process, not just an end-of-year affair. It should also be 3-way: supervisor à employee; employee à supervisor and both à ‘the system’. This ongoing circle (top-down, bottom-up) and asking “Do you have what you need?” is a powerful disruptive rule leading to true transformation. I know, it’s not the usual way. But it works miracles.

Many organisations have a performance appraisal system for managers and staff which has its highlights at the end of the year. At that time, a few weeks get semi-paralysed as the process of completing documents takes over. Discussions take place between managers and those managed. HR is busy reminding people of deadlines and sending guidelines to departments about how to fit their employees into the relevant Bell curve. The rhetorical dance of achievers, over-achievers, contributors, those that can do better and those with a poor performance starts. The numerical outcomes categorise the organisation: all pristine and elegant, all accompanied by a great sense of completion.

Most companies would say that the process has a strong ‘personal development ethos’. In other words, it is mainly about knowing how to get better and how to develop more competencies and skills. However, there are sometimes two parallel business universes: a glorified one where the rhetoric is as above and a more prosaic one, where command and control mechanisms reign. Both may overlap.

The outcome of the performance appraisal may have implications for a salary increase or other rewards, so it is not taken lightly by people. But in managerial and behavioural terms, the end-of-year concentration on assessment, soul-searching, ‘tough conversations’, etc. is a very poor way of using feedback loops. In behavioural terms, the feedback, whether positive or negative, needs to happen almost instantly. Managers are supposed to feedback on the spot. Recognising positive contributions is something that needs to be associated to the event, if there is one. If it’s about continuous good contributions, then recognition needs to come in frequently, but not constantly and at random. Dealing with negative performance needs to be dealt timely as well, preferably in the form of finding alternative ‘good bits of performance’ to reinforce and to point in the right direction. One way or another, the end-of-year ‘balance sheet’ is hardly efficacious. In the absence of an alternative, an end-of-year system may be welcome, but that doesn’t make it ideal.

A shift from an end-of-year to an ongoing performance appraisal brings significant benefits:

• It is likely to get rid of the ritualistic aspect of the end-of-year appraisal, where everything gets a bit paralysed and human emotions (expectations, disagreements, ‘tough conversations’, overdoses of praise) dominate the environment, more often than not distracting people from the business of doing business.
• Redirection of negative performance is dealt with on the spot.
• Reward and recognition are timely associated with performance, building a case for monetary reward if this is one of the possibilities.
• It would avoid the end-of-year ‘halo effect’. Very often, the end-of-year appraisals are contaminated by the emotions described above. Managers either try to be too nice as a way to end the year ‘on good terms’, or they are too negative, having waited all year for the opportunity to vent all their frustrations. To squeeze everything into one particular narrow window of time is a recipe for unfairness.

Taking the model of ongoing performance appraisal seriously would mean that you would have frequent appraisal discussions and provide frequent re-direction/coaching. Taking it to the extreme would mean that there is no such thing as an end-of-year review because it would just be a consolidation of a continuum, i.e. the end-of-year review would be of no greater relevance than the last one held during the year. You would de facto be installing your own internal clock for dealing with performance. You are in charge and not your calendar.

Many people are stuck somewhere in between and have performance reviews twice a year. This is certainly better than one at the end of the year, but in reality it doesn’t change the philosophy of a punctuated review. The true small revolution I am suggesting is that you suppress the Big Formalities in favour of a continuous effort with several points of check up, review and dialogue during the year.

Other than a 365-affair, performance appraisals should also be 3-way, not just one way. The first one is manager appraising staff as done traditionally. It should be followed by the other way around, by the manager asking, “Have I helped you? Can I do other things for you? How am I doing, helping you as your manager?” This is far from a naïve, romantic or pseudo-democratic process. Managers should receive feedback at the same time as they give it. If this is the norm or if it spreads virally, the credibility and trust grow exponentially. It works wonders. The third way is both manager and staff appraising ‘the system’. This means they both (i.e. both manger and staff) need to answer the question: “Do we have/Have we had the tools to do my/our job?” In other words, is the organisation providing the processes and systems suited to get the job done? This interrogation of the system is extremely healthy. In some (but not all) cases, managers may have to take action and provide for different support. It is vital that the appraisal is done ‘as a circle’ consisting of these three components. In this way, 365 performance appraisals become a continuous source of improvement, trust generation and organisation building, instead of just a command-and-control, unilateral, top-down exercise.

Appraisal should be 3-way: manager → employee; employee → manager and both → the organisation and its tools.

In any case:

1. Building mode versus command-and-control.

2. Dialogue versus interrogation.

3. Ongoing versus end of year or 2x year.

Appraisal time is airtime, is behavioural reinforcement time. What do you talk about? ‘Making the numbers’? Developing your people? Opening a new market? Leading a team?

Allocation of percentages and weights is standard practice. Tip: don’t bother with anything below 10%.

Copyright © - Leandro Herrero - 2008