Introduction
Letting Go of a Hopeless Ritual

Throughout our work lives, most of us have struggled with performance appraisal. No matter how many times we redesign it, retrain the supervisors, or give it new names, it never comes out right. Again and again, we see supervisors procrastinate or just go through the motions, with little taken to heart. And the supervisors who do take it to heart and give it their best mostly meet disappointment. Earnestly intending to provide constructive feedback and write good development plans and goals, they find that people with less-than-superior ratings are preoccupied with the numerical rating rather than the message. Except for those receiving top ratings, the good conversation they had hoped for rarely happens. Employees tune out and politely complete the interview. Others become defensive and resentful, with shattered relationships sure to follow. Then the supervisors ask themselves, “Where did I go wrong?” knowing they were only doing their job. Some blame themselves. And even more attribute the outcome to the employee’s bad attitude in refusing to accept constructive criticism.2

After every new experiment with appraisal, word of disappointment filters its way back to the Human Resources department. The H.R. staff reflects on what has happened. They had tried to create a process that would please everyone. They researched and then redesigned the steps, scales, and forms to be friendly and meet organizational objectives. Well-planned and high-spirited training was provided. The new tool was proudly conveyed with sincere enthusiasm. But then the fizzle came, with all the symptoms of the past—the disenchanted supervisors, the procrastination, the employee complaints and appeals. Rather than helping people, the H.R. staff finds itself policing, refereeing, and collecting a lot of paper that doesn’t mean much to most people.

Most of us have seen this pattern. We readily recognize the widespread ineffectiveness and resistance to appraisal as well as the unintended, undesirable effects. Most of us tend to treat these outcomes as anomalies to be cast aside, blaming the givers as defective managers and the receivers as malcontents. Because of these beliefs, we continue to hope that people can turn it around and get it right.

Even with our best efforts, however, we cannot get it right. The source of the problem is not the people involved—it is in the appraisal system itself, its very nature and its unseen, underlying premises.

In this book, we uproot the underlying premises and beliefs of appraisal so you can see the causes of appraisal outcomes and damaging effects. Upon reflection, we expect you, too, will see that appraisal is a hopeless and futile path. In its place, we offer real hope and entirely new pathways.

We work from the intended purpose of appraisal. Your motives for doing appraisal were never wrong—they were noble and worthy. Good communication, improving performance, motivating and helping employees with their careers, fair promotion and pay practices, reliable legal documentation, and properly documenting counseling and corrective actions—all are valid and necessary objectives. Building from these noble intentions, we open new doors and offer alternatives that can bring success and restore joy to people’s work. We offer specific guidance on how to transition away from appraisal and even have fun doing it. The pain of policing and the paper-collecting drudgery of appraisal were never fun. In discarding appraisal, however, there are unlimited opportunities for interesting challenges and joy in learning.3

The Legacy of Appraisal

Assuredly, challenging the very notion and necessity of appraisal is a daunting task. The practice of giving employees annual ratings or performance evaluations is widely accepted as an essential and valuable tool throughout the business world. Indeed, it is difficult to find large organizations that do not subscribe to the practice of appraisal. Over the past several decades, many books have been written about performance evaluations or performance appraisals (as human resources professionals prefer to call them). At our most recent checking, Amazon.com offers nearly 200 titles that focus on the less-than-fascinating topic of appraisal—more than 50 were published since 1994. The Library of Congress lists more than 500 titles on the topic of appraisal dating back to 1898. Half of these were published after 1975.

While many of these books talk about the pervasive problems associated with appraisal, sparingly few of them engage in any serious, in-depth discussion of the bigger question: Are they needed at all? Instead, they give advice and suggestions on how to improve appraisals rather than considering the possibility of a work world without any kind of performance appraisal.

This book is different. It is not written to give you a better approach in using performance appraisals. We have nothing new to sell you. We offer no “newly designed, re-engineered, total-quality, 360-degree, competency-based, high-performance management appraisal process” or any other bottled medicine. Our objective is simple. We wish to challenge you to think about the use of appraisals at a deeper level—to ask yourself the questions rarely contemplated by managers and organizations that perpetuate the use of appraisal today:

• Why do you use performance appraisals?
• Do they accomplish your intended goals?
• What are their real effects?
• Do you really need any kind of performance appraisal system?
• If not, are there alternative ways to accomplish your intended goals?

We challenge you to explore these questions with an open mind and then ask you to consider new possibilities to build a more joyful and productive workplace, including, can you imagine, work environments without any performance appraisal system.

What This Book Is NOT About

The confusion and complexities of appraisal are so commonplace that we must briefly say what this book is not about before telling you what to expect.

This book is not about a better or new way to do performance appraisals. This book is about eliminating appraisals, not doing appraisals in a different way. Nor does this book offer a specific, canned alternative to replace appraisal. As we explain, no one system can address the complex goals of appraisal. And to meet the needs of your unique organization, there are no easy solutions. With examples and a clear-cut strategy at the close of the book, however, we do tell you how to escape the perennial disappointments of appraisal and create alternatives that will really make a difference.

This book is not about a new way to do pay-for-performance. The issues surrounding appraisal and merit pay practices overlap to a considerable degree, yet they are different. Incentive pay systems are also fraught with problems, some of which arise from the inability to accurately assess individual performance. Eliminating appraisal does not necessarily mean giving up merit pay practices. For many organizations, however, abolishing performance appraisals will pose new challenges and deeper questions about their merit and incentive pay practices (as we discuss in Chapter 6).

This book is not about replacing performance appraisals with a formal mandatory, written feedback system. Managers are increasingly aware that many employees do not like rating scales because of their rather arbitrary and reductionistic nature. To c ure these defects, many organizations have moved to a system of annual, written feedback, without rating scales or any connection to pay raises. While this method eliminates some of the problems of traditional appraisal, it nonetheless perpetuates much of the thinking behind appraisal, creating unhealthy effects as we explain in Chapter 5. 5

Then What Is This Book About?

This book is about questioning the underlying assumptions behind the use of performance appraisals. For appraisal to be a reliable and useful tool, certain premises must hold true. For example, we must believe that all employees want to be coached with the same approach, or we must believe that people who rate performance can be unbiased and objective. We have asked thousands of people whether these and other appraisal assumptions are reasonable. The response is always the same—the key underlying assumptions of appraisals are not logical and realistic.

This book is about a return to authenticity in communication, giving feedback, and partnering with employees. Good communication is critical in today’s fast-changing workplace. More than ever before, we rely on employees to be committed and responsible for the functions they serve. We need employees to partner with management in meeting customer needs amid global competition and, in the public and nonprofit sectors, to help us survive life-threatening financial conditions. Far more often than not, appraisal actually impedes authentic communication and partnering.

This book is about redefining the roles of managers and employees. In this new century, the relationship between managers and employees is undergoing dramatic change. The new workforce, if it is to be energized at all, will more and more demand a genuine say in how the work is to be done. The prevailing mode of work has shifted to empowerment, collaboration, and teams. These changes mean that every manager will serve in a new role. It requires a shift from “managing” people to helping people manage themselves and the business. With the information age, new technology, and flattened organizations, a manager’s work-knowledge skills will become increasingly less important. More and more workplaces of the future will require managers to excel in people skills and the artful leadership evinced by a shared sense of purpose and vision.

New roles for managers also means new mental models for employees. Paramount to this book is the idea: Employees want to be and are fully capable of being responsible for themselves. With a supportive work culture and access to helpful resources and training, employees will take responsibility to get timely and useful feedback, grow their skills, and improve their performance in alignment with organizational needs. 6

In asking you to abolish appraisal, we are really challenging you to answer a deeper question: What type of work culture do you really want to create? Do you want one where managers are responsible for their employees or where everyone through collaborative efforts is accountable for the work to be done?

This book is about giving leaders the freedom to choose for themselves the most effective ways of working with people. It is hypocritical and unrealistic to hold executives, managers, and supervisors “accountable” for outcomes or talk about an empowered organization when we mandate one specific coaching approach for everyone who supervises. Though well intended, appraisal uniformly imposes a single method for conveying feedback, managing performance, measuring competencies, developing employees, and the like. Instead, each manager, based on his or her unique personal style and particular assignment, must be given the space and freedom to choose the best methods and timing for coaching, feedback, and fostering performance and development.

Lastly, this book is about refocusing on outstanding organizational performance. The widespread practice of using individual performance appraisals to attain organizational improvement stems from the myth that better organizational performance will result from getting each person to do a better job. Substantial organizational improvement can only be achieved by improving the whole organization as a complex system. While individual improvement efforts are beneficial and often necessary, too much emphasis is placed on improving the organization by working on individuals. In place of appraisal, we urge organizations to use alternative strategies that seek improvement from a broader perspective. At the same time, we discuss how individual improvement initiatives can better align with the organization as a whole.

Getting to the “Instead”

If you are anything like the audiences we encounter, you anxiously want us to just zip ahead to “what to do instead.” The “instead” is not a concise list, a set of new forms, or best practices that you can model. The “instead” can only begin with new thinking. And we know no effective way to help you get there unless you first understand the dynamics of appraisal and why it fails. To s hort-cut this step will only doom your best efforts to start anew. 7

We are often told about companies that purportedly have abolished appraisal. But when we take a closer look, we find they have adopted merely a variation of appraisal—people are still having things done to them, paper is collected for the personnel file, and every employee and supervisor is required to use some process that was determined to be in their best interest. Invariably, the symptoms and effects of appraisal pop up again.

To get to an “instead” that will really make a difference, you must design alternatives from an entirely new set of premises and beliefs about people, work, motivation, improvement, and the nature of leadership. For most of us, it is extremely difficult to think in terms of new assumptions— our conventional ways of looking at workplace issues are steeped in hidden, unhealthy assumptions that underscore control and a lack of trust in employees. To keep them from popping up again in designing our “in-steads,” we must look at what happened in appraisal and clearly identify the operative assumptions. Only then can we avoid repeating our mistakes.

We are as anxious to get to what to do instead as you are, but to create meaningful alternatives, we must work through the assumptions. To ease this arduous task, we provide an overview of appraisal’s pervasive assumptions (Chapter 1) and throughout the book discuss assumptions relating to the functions of appraisal. To reinforce the learning, we close chapters with a recap of conventional appraisal assumptions and new assumptions from which we can create alternatives.

A Road Map

The book is organized into three parts: Why Appraisals Backfire: The Fatal Flaws (Part One), What to Do Instead: Five Functions of Appraisal (Part Two), and How to Get There: The Transition to Alternatives (Part Three).

Part One provides foundations that are critical for the remainder of the book. Chapter 1 clarifies what we mean by appraisal and spells out its key functions. It further explains the mechanics of underlying assumptions and discusses assumptions that repeatedly crop up in the various functions of appraisal. Chapter 2 challenges you to think about organizational improvement in a new light. This new perspective will prove invaluable in designing alternatives to appraisal. In Chapter 3, we examine appraisal’s track record as a rating tool. As you probably understand, this is an important underpinning to other functions of appraisals, particularly pay and promotions. 8

In Part Two, we discretely examine the five major functions of appraisal in separate chapters: coaching (Chapter 4); feedback (Chapter 5); fair pay and motivation (Chapter 6); development and promotions (Chapter 7); and problem performers and legal documentation (Chapter 8). With respect to each function, we identify the most commonly held underlying assumptions. From this foundation, we recommend specific strategies with case studies and examples for designing alternatives.

In Part Three, we lay out a series of sequential steps to phase out appraisal and to design and implement alternatives. Finding the right alternatives for your organizations cannot be expedited—it requires careful inquiry and strategic measures to garner support from the entire organization. Bypassing these measures is a sure formula for failure.

At the end of the book, What the Sages Say and Further Reading and Resources provide supplemental information.

The most difficult challenge in writing this book was to find a logical, coherent order to present the ideas. We have found it most difficult to write about any one aspect of appraisal functions and problems without concurrently addressing others. After considerable rework, we found this presentation to be the most economical and effective. You may have bought this book with particular interest in a single function, such as feedback, pay, or employee development. However, you will get the most out of this book if you resist the temptation of jumping ahead, or, if you can’t resist, then at least read through Chapter 3 before skipping ahead.

Though abolishing appraisal is the prevailing theme of this book, we understand that, in the end, you or your organization may not choose abolishment. If you choose to stay with appraisal, however, we hope, at the very least, that this book enables you to better understand what you are doing and why you are doing it.