The Myth of Organization Improvement using Performance Appraisals…

Hi guys, I will dedicate this post to one of the most common reasons that companies/managers provide for the existence of Performance Appraisals: “Improve the Performance of the Organization”. To accomplish this objective, I would like to start explaining how Performance Appraisals appeared in our society.

Nearly hundred years ago, two gentlemen called Frederick Winslow Taylor’s and Henry Ford, changed the gmae completely at that time. Taylor’s was the father of the scientific management and Ford the father of Ford automobiles. Both of them defended that an organization worked like a machine. Small parts connected with each other that created a bigger part. People in this case were just mere pieces of a bigger puzzle. People were just parts that needed to be controlled in order to get alignment within the bigger picture. They reduced jobs to simple, repetitive and mechanical tasks allowing them to control what people did. I just want to highlight that at that time all these made sense. We are talking about manual work, something completely different than these days.

Based on the success of this approach, it did not take long time until all these ideas were spread to many other industries such as services, education, healthcare and many others. Even in different industries, individual performance appraisals allow companies to assert control and make people accountable for their work. Around 50s, performance appraisals became a common practice that offered a nice feeling of accountability and control over employees. Tom Jenkins refers in this book Abolishing Performance Appraisals: “This process created the illusion that each part (employee) of the machine (organization) was operating (working) efficiently and effectively. If each part worked well, so would the machine.” Another and much more serious outcome was the fact that Performance Appraisals were great to hold people accountable for directives, this was done successfully connecting performance appraisals outcomes with pay raises. This would guarantee compliance from employee, as you can see from the example presented below:

Not long time ago, I heard a case of a manager who asked something to an employee. The employee, not agreeing with manager´s statement, referred that he wouldn´t do it because he thought that wasn´t a good idea. What the manager did? He put this matter on the employee targets for the semester!!! How many of you faced something like this?

After the manufacturing era, a new movement close to the 1960s emerged. This movement was called Management by Objectives which had the objective of assigning numerical targets that matched organizational needs. Naturally, people started to be measured quantitatively once per year to see how well they met their targets. This sounds like a fantastic idea for companies which thought this would be a great way to rate people in objective, fair and reliable way. This practice had its peak on the 1980s, but surprisingly the promised success that companies expected never appeared. People were highly demotivated and not happy at all with the process. People always found ways to tweak the outcome manipulating data and cheating numbers in order to achieve desired results.

Nowadays we live in a world where companies aim for environments that provide freedom rather than control. Modern companies know that, with less control and greater autonomy over employees, commitment and innate motivation will flourish. Companies start to figure out as well that organizations are systems and because of that they cannot be improved focusing on individuals. In reality, focusing on an the overall system improvement will give better results than trying to get employees to improve their individual performance.

The nature of the majority of our work is different than from the manufacturing times. This means that the type of jobs in today´s world belong to what we call Knowledgeable work. Tasks are not repetitive like in the manufacturing time, tasks are constantly changing and require a level of innovation which was before never necessary. People are required to work in a completely different way than before, yet most of the companies use outdated processes aka Performance Appraisals to rate and evaluate people. If companies wanted to survive and grow they would need to be live evolving systems where variation, differentiation and diversity are values as well as roads to innovation and improvement.

Based on everything what I mention above, I think it is clear that referring to Organizational Improvement as one of the excuses to conduct Performance Appraisals, is an idea that does not make so much sense.

This blog post is part of my new book that I am writing: Get Rid of Performance Appraisals that you can find here. If you are interested on the topic please subscribe as a Beta Reader and receive the 1st part for free. HERE

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Leave a Comment

  1. Reply

    Nice post, but how do you reward people in an organisation? I think assessing (or rewarding) the performance of your employees should not be mixed with growing them (or your organisation). People grow when they can do the work they are passionate about and never by setting yearly goals in some personal development plan.
    But people do want to be recognised for the contribution and effort they did. I think a system where the input for a ‘contribution measurement’ comes from your fellow employees is at least more transparent and fair.
    What is your take on this?

      • Luis
      • March 9, 2014

      Hi Mark,

      Yes people want to be recognized by their contribution but there are several ways to do it. But MONEY is not one of them.

      I do not know if you know a book called Drive from Daniel Pink, there he explains that people are motivated to work and perform when they have the possibility to achieve: Mastery, Autonomy and Purpose in their jobs.

      One example of what you can use to recognized people is what Jurgen Appello refers in his Management30 course. The Kudos Cards.

      Of course there are other ways but this is quite nice.

      A contribution meansurement is not a good approach… You cannot rate or measurement people in a fair way. For this topic check my latest blog: here.


      • Reply

        I agree that money should not an incentive, but as Pink says it ‘it should be off the table’, how do you get to such a situation? I think one way is Jurgen Appello his ‘Merit Money workout’, which is what I meant by ‘contribution measurement’, basically the kudo-system but then a little bit more formalised.

        I also think that to get to a situation in which money is no issue, we need a fair and good system to determine everybody his salary/salary increases. If that is not in place we won’t get to a state in which money is off the table and we can’t focus on ‘bringing out our real potential’.

          • Luis
          • March 9, 2014

          True :) And If you wait a couple of weeks I have a blog post just about that :) How to take the money out of the table :)

          Part of my new book Getting Rid of Performance Appraisals :) Stay tuned :)

          Best wishes,

          • Looking forward to that!

            • Luis
            • March 19, 2014

            Hi Mark,

            If you are still interested you can subscribe to the mailing list book here. You will belonging to the Beta Readers community and you can actually help me with the creation of a great book :)


    • David Koontz
    • March 3, 2014

    I don’t know if business learns from science – if so it sure seems to take quite a while. Science knows performance appraisals will demotivate the majority (and even the lucky ones) – yet few businesses try any alternatives – why?

    Performance Appraisals what have we learned in 50 years?

      • Luis
      • March 8, 2014

      Thanks for the post :) Nice one :)

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