This is the fifth article in a series of six on why performance appraisals don’t correct poor performance.

Thus far, we’ve seen how unpopular this method of evaluation is, both for the giver and the receiver, how it causes emotional pain, and wastes time and other resources.

We’ve also seen the abuse that employees are made to endure as a result of the improper application of the famous bell-shaped curve, how terminology can make these reviews both unreliable and invalid, and how difficult it is to delineate the behaviour of one person from another because the sum of what is accomplished is greater than the individual parts.

And we’ve learned that even performance evaluations that use only numbers are flawed, partly because of the standard that some managers believe is possible, partly because of the halo effect, and also because of what could be called rating inflation.

All of this should be enough to convince you that performance appraisals should be placed in the round file we refer to as the dustbin. A jury would have convicted long ago.

However, given the widespread use of performance appraisals, it’s necessary to strengthen the case. And so in this article, we will do just that. We’re going to think about how these evaluations are conducted; that is the actual methods.

The three most popular are MBO, Multi-rater, and self-appraisal.

MBO

Management by Objectives, or MBO as it was later referred to, arrived on the scene in the 1960s.  The late Robert Townsend, former chairman and President of the Avis rental car company, described it as an activity of two parts, each lasting about six months.

In the first part, everyone in the company would come up with a list of objectives that they each would fulfill over some predetermined period of time, and then in one or more meetings with their supervisors, they would reach some kind of agreement on them.

Then, just about the time everyone was recovering from that exercise, everyone would start to compare how they did against the criteria that had been agreed with their supervisors. Ratings would be given and bonuses paid accordingly. Then the process would start all over again.

MBO was considered to be good management because decisions were based on rational choices and all staff participated in deciding their own goals. The problems, however, outweighed the benefits.

For one thing, everyone had to participate and be willing to do so.

Maybe this sounds odd to you, that people could actually choose whether are not to do it; but this was back in the days when employee choice was held in high esteem. Autocratic organisational management certainly wasn’t flavour of the month.

Another problem was that, with a little creative writing, objectives could be set that were quite low and therefore easily attainable because no one except the person who wrote them knew what they meant; and managers didn’t have the time to find out.

On top of this, the same lack of interviewing skills mentioned in an earlier article prevented both the optimum setting of goals and the assessment of their achievement. And you don’t have to be a rocket scientist to recognise that the entire effort was an administrative nightmare.

Multi-rater feedback

After the failure of MBO came multi-rater feedback. The idea here was to improve what you might call north-to-south evaluation. The method has been given other names, too: 360-degree or 180-degree feedback.

All of this sounded great on paper, but in practice it exemplified the sentiments of a song from the 1950s which said, “We belong to a Mutual Admiration Society”.

You see, not many people have a personality conflict with everyone.  Even our worst enemies have friends. And so when you expand the range of those who are evaluating others, the overall assessment of that person is likely to be higher than if it’s limited to those at work.

Even so, the idea was that it would minimise the idea that any one person was being victimised and, theoretically, gave a more complete picture of someone’s performance.

Clive Fletcher, Professor of Occupational Psychology at Goldsmith’s College, University of London had this to say about multi-rater feedback:

“The demands of running 360-degree feedback annually are considerable . . . A manager who has four subordinates, four peers and who has links with two superiors ends up with 10 feedback forms plus a self-rating to complete every year.”

What did that look like in terms of time? Each evaluation was intended to take no more than a quarter of an hour or 15 minutes, if you prefer. In Fletcher’s example, 10 forms would take 2-1/2 hours to complete, which is slightly longer than the time required for a manager and an employee to meet for one hour.

But imagine this: With180 staff, that small increase cost the organisation an additional four months in time each year just to conduct the exercise, 25% more time than using the traditional method. The other thing is that 15 minutes is barely enough time to confirm someone’s name, address and date of birth. You aren’t going to learn anything meaningful about someone’s performance for a week, never mind a year in that length of time. And any attempt to do so makes a mockery of the entire activity.

Then there was the added cost of writing, testing, administering, and evaluating the surveys themselves. You’ll recall from the last article how difficult it is to create evaluation forms that are reliable and valid.

Another issue was that, even though each evaluation was given equal consideration, some people knew the person being rated better than others.  This meant that the picture of someone’s performance was likely to be imbalanced, rather than balanced as it was intended. So, while it seemed like a good idea on paper, when it was actually tried, it only made matters worse.

Self-appraisal

It was bound to happen, but eventually someone got the bright idea that people ought to evaluate themselves. Here’s how it worked.

Employees would complete the self-appraisal in advance of a formal session with their supervisors. After a brief discussion, both the subordinate and the supervisor would sign it. What could possibly be wrong with this?

For one thing, it sounds a bit like MBO, except the objectives, if there were any, weren’t agreed upon in advance. And individual could simply say, “Look what I’ve done!” Unless the manager was intimately familiar with what was possible or what should have been done, any accomplishments probably would have been insignificant.

And you have to ask yourself: If the manager doesn't know enough about the individual's performance to conduct a meaningful evaluation, why is that person part of the process at all?

Conclusion

MBO, multi-rater feedback and self-appraisals make up the bulk of the traditional methods of performance evaluation. The first two take more time to complete than they’re worth and fail to do anything more than consume limited resources. The last method is a box-ticking exercise.
It’s not objective or informative.

If that wasn’t enough, then it’s worth remembering that some organisations use these evaluations as a means to predict job success. Just like investments, however, past performance is no guarantee or predictor of future events. In any case, assessing what someone might do is an unfair way to consider what he or she has done already.

Even criminals aren’t treated like that.

It’s impossible to give praise for something that hasn’t happened yet. We all of us have great ideas, but it’s the implementation that matters.

In the next article, we’ll conclude our study of performance appraisals.  We’ll think about what appraisals are used for, more reasons why they don’t work, and consider an easier and more effective method for evaluating performance.

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