I ran across a great article on the problems created by our common use of performance appraisal today: Unjust Deserts (pdf format) by Mary Poppendieck:
As Sue’s team instinctively realized, ranking people for merit raises pits individual employees against each other and strongly discourages collaboration, a cornerstone of Agile practices.
…
There is no greater de-motivator than a reward system that is perceived to be unfair.
…
There is no greater de-motivator than a reward system that is perceived to be unfair.
The article does a good job of explaining these, and several more, problems caused by performance appraisal. It also provides some good thoughts on how to manage effectively, including:
While monetary rewards can be a powerful driver of behavior, the motivation they provide is not sustainable. Once people have an adequate income, motivation comes from things such as achievement, growth, control over one’s work, recognition, advancement, and a friendly working environment. No matter how good your evaluation and reward system may be, don’t expect it to do much to drive stellar performance over the long term.
People are increasingly challenging the notion that we just have to live with performance appraisal systems. As usually, I will make my suggestion that chapter 9 of the Leader’s Handbook offers great material on performing without appraisal (and the rest of the book is great too). More related resources:
Pingback: Curious Cat Management Improvement Blog » Don’t Use Performance Appraisals
Pingback: CuriousCat: Deming and Performance Appraisal