Appraising Performance: Strategies and Lessons Learned

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Appraising Performance Strategies and Lessons
Learned

• Wendy K. Soo Hoo, Assistant City Auditor
• City of Seattle
• November 2004

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Agenda

• What the Experts Say About Performance Appraisals
• What Do You Think?
• Performance Appraisals Versus Performance
  Management and Other New Practices
• Conducting Effective Meetings About Performance
  (and Other Difficult Conversations)

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• What the Experts Say About Performance Appraisals

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Performance Appraisal Definition

• A PERFORMANCE APPRAISAL IS
• One of those special human encounters where the
  manager gets no sleep the night before, and the
  employee gets no sleep the night after.
• Thomas B. Wilson

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Overarching Goal

• To create and promote a workforce that can
  achieve the organizations mission to provide the
  most value to its stakeholders

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Elements of Traditional Appraisals

• Goal SettingSupervisors set performance
  objectives or standards for individual employees
• MeasuresTasks or levels of performance are used
  to gauge whether person has achieved his/her
  goals
• FeedbackComparison of performance to goals is
  usually provided at end of performance period
• Performance RatingSupervisor judges overall
  performance and gives numeric rating
• Merit PayPay increase based on performance
  rating and market price for position.

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Performance Appraisals in Your Organization

• Are managers in your organization required to
  conduct performance appraisals?
• 1 Yes 2 No
• Do you give performance appraisals, do you
  receive a performance appraisal, or both?
• 1 Give Appraisal 2 Receive 3 Both

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Appraisal Process Objectives

• Managers Recognize and reward top performers.
• Employees Obtain honest, timely feedback,
  development and coaching.
• Compensation Managers Ensure that dollars
  allocated according to performance.
• Human Resource Executives Identify top
  performers and plan for their development and
  succession.

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Whats Wrong With This Picture?

• Managers are usually uncomfortable with appraisal
  process.
• Employees are not happy with the assessment of
  their performance.
• Most organizations (90) do not consider
  performance appraisals to be effective.

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Myths Reality

• Appraisal process can effectively serve several
  functions
• One-size-fits-all works well for supervisors and
  employees
• Ratings are motivating
• People withhold effort without incentives

• Often one function undercuts the other (e.g.,
  employees focus on pay)
• Different preferences in coaching, receiving
  feedback
• Ratings dont provide useful information and can
  be demoralizing
• People are intrinsically motivated to perform
  well when work is meaningful

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Why Appraisal Processes Often Fail

• Appraisal process only operates for part of the
  yearnot meaningful if goals are not monitored.
• Ratings are based on managers opinions, only
  include what managers remember.
• Managers avoid honest feedback to prevent
  conflict.
• Organizations try to meet too many objectives
  (feedback, development, pay raises, etc.).
• Employees believe criteria are vague, subjective
  can be demoralized by ratings, especially when
  pay is involved

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Linking Pay to AppraisalsA Good Idea?

• At least two dozen studies over the last three
  decades conclusively documented that people who
  expect a reward for completing a task, or for
  doing that task successfully, simply do not
  perform as well as those who expect no reward at
  all.
• Harry Levinson

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Rewards or Punishment?

• Pay is not a motivator, but it can be a
  de-motivator when it is inequitable
• Rewards can create conflict between managers and
  staff, or among staff members
• Rewards undermine interest because artificial
  incentive cannot match intrinsic motivation

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Merit Pay Increases and Performance Appraisals

• Should merit pay increases be included in the
  performance appraisal process?
• If the purpose is to provide feedback, encourage
  development, probably not.
• If the purpose is to reward the individualmaybe.
  
• Merit pay increase should be given when
  individual shows new capabilities over a
  sustained period, rather than end-of-the-year
  appraisal.

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Remember Myers-Briggs

• Anyone who supervises someone else should
• Look carefully at the assumptions made about
  motivation.
• Assess the degree to which carrot-and-stick
  assumptions influence own attitudes.
• Harry Levinson

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What Do You Think?

• On a scale of 1 to 5, what do you think of the
  performance appraisal process?
• 1 Performance appraisals always meet these
  objectives.
• 2 They meet some of these objectives.
• 3 They are a necessary evil.
• 4 They could/should be improved if we
  continue to use them.
• 5 Performance appraisals should be eliminated
  altogether.

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What Do You Think?

• Do appraisals encourage you to work harder?
• 1 Yes, I work harder because of the
  appraisals.
• 2 Yes at least for the the month before or
  after my appraisal.
• 3 No, my effort would have been the same with
  or without an appraisal.
• 4 No, I find performance appraisals
  discouraging and ineffective, which impacts my
  work effort.

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So What Do We Do Instead?Performance Management
and Other New Practices
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Typical Process Ideal Process

• Highly subjective
• Unilateral (only from the managers perspective)
• Little focus on future capacity
• Uncertain link to business success drivers

• Explicitly defined
• Mutually understood, with multilateral
  communication
• Strong development focus
• Grounded in business success drivers

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SMART

• SpecificGoals and criteria should be clearly
  defined
• MeaningfulEvaluation process should impact
  behavior
• AchievableGoals should be realistic process
  should provide incentive to perform beyond
  expectations
• ReliableProcess should achieve
  desired objectives
• TimelyPerformance reviews and feedback should
  occur more frequently than once each year.

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Performance Management

• Performance management is the process of creating
  a work environment in which people are enabled to
  perform to best of their abilities.
• Begins when a job is defined and ends when the
  employee leaves your organization.

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Performance Managementat the Organization Level

• Clearly define and communicate the organizations
  mission, strategies, and performance goals.
• Provide appropriate training for managers on
  giving feedback.
• Ensure employees receive ongoing feedback and
  appropriate training.
• Align job descriptions with organizational
  goals.
• Conduct exit interviews to understand why valued
  employees leave the organization.

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Performance Managementat the Manager Level

• Involve employees in goal-setting process goals
  should be flexible enough to reflect changing
  workplace conditions.
• Clearly articulate performance metrics used to
  measure employees success in meeting agreed-upon
  goals.
• Provide training to employees to strengthen
  performance and advance career.
• Provide ongoing on the job feedback.

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Performance Managementat the Employee Level

• Develop performance goals with his/her manager.
• View manager as a coach or mentor rather than
  someone who passes judgment.
• Be receptive to feedback.
• Dont rely on manager to provide all the
  feedbackemployee is also responsible for
  providing information on his/her performance.

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Other New Approaches

• Evaluations in new systems are not conducted for
  raises, promotions, or bonusesinstead for
  development and communication.
• Most important aspect in all is multilateral
  communication between employee, managers, and
  others, rather than one-way communication.

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Examples

• Pass/fail systems or no ratings at all
• Peer reviews
• Self-reviews
• Upward assessments
• 360-degree feedback

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Owning the Solution

• If people do not participate in and own the
  solution to the problems or agree to the
  decision, implementation will be halfhearted at
  best, probably misunderstood, and more likely
  than not fail.
• Michael Doyle in forward to Kaner, Sam
  Facilitators Guide to Participatory Decision
  Making New Society Publishers, Gabriola Island,
  BC 1996

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Recapping the Key Points

• Expectations should be linked to business
  objectives
• Performance goals should be established
• People should be coached, mentoredemployees
  should be motivated and
• Assessments relying solely on supervisors
  perspective will have limited value.

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Are You Using Any New Techniques?

• 1 Yes, and its more effective than the
  traditional appraisal process.
• 2 Yes, were still evaluating the
  effectiveness.
• 3 Not yet, but were thinking about it
• 4 No, well probably always use the traditional
  appraisal process.

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Dealing With Difficult Conversations
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Four Stages of Difficult Conversations

• Prepare
• Initiate conversation
• Explore their story, then yours
• Collaborate on resolution

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Stage 1 Prepare

• Consider your objectives and approach
• Conduct researchif youre the manager, review
  the employees file, outline some topics and
  talking points, do a mental walk-through.
• Employee should consider their performance as
  well and prepare notes or jot down concerns and
  questions.
• Be open to multiple perspectives
• Adopt a positive mindset (see next slide)

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Choose a Positive Context

• When a conflict is framed in a negative context,
  the focus is on power, and will likely result in
  a winner and a loser.
• Focusing on improvements instead of mistakes can
  defuse the tension.

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Stage 2 Initiate Conversation

• Invite conversation and share your purpose
• Key practice describe the issue/problem as a
  difference in perspective
• Avoid problem solving during initial stage of
  conversation
• Acknowledge feelings, which are frequently core
  issues, before attempting to solve stated problems

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Stage 3 Get Their Story-- Then Tell Them Yours

• Start with their story
• Dont assume that you know their story
• Dont push backListening does not imply
  agreement
• Express your views and feelings after their story
  is finished

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Your Story

• Start with the most important points
• State what you mean clearly to avoid assumptions
• Share how you formed conclusions
• Avoid words like never or always or fault
• Present your story as your truth not the truth

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Stage 4 Collaborate on Resolution

• Invite the other person to help identify
  solutions
• Invite the other person to come back if attempted
  resolution is not successful
• Remain hopeful that mutually acceptable solution
  is possible
• Recap major points, be sure to end on encouraging
  note

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Key Sources

• Wilson, Thomas B. Innovative Reward Systems For
  the Changing Workplace, McGraw-Hill, New York
  1994.
• Flannery, Thomas P., et. al., People,
  Performance, and Pay, The Free Press, New York
  1996.
• Various articles published on human resource
  websites