Deming and Performance Appraisal

Guest post by Ron Kingen (originally posted to the Deming Electronic Network)

Several weeks ago someone in the DEN list ask what did Dr. Deming recommend about this issue, well I ask that very question of Dr. Deming back in the 80’s when I had the good fortune to work with him. I had expressed my concern to Dr. Deming about several of his fourteen points that I either didn’t understand completely or did not fit with my experience and/or education. Dr. Deming suggested we talk about it over dinner – during the subsequent dinner discussion Dr. Deming made several points relative to performance improvement (not appraisal):

  1. Hire good people – one of the most critical decisions we all make.
  2. Train and educate them – even if they come from the best universities and are at the top of their class.
  3. Coach them, constantly, don’t wait for an annual appraisal to correct an issue or behavior.
  4. It is the system that must be improved to ensure people work to their potential.
  5. Recognize your top performers, but money isn’t the best method of recognition, in fact, it can be counterproductive.
  6. Work with your low performers to understand their issues and difficulties; give them support and assistance. If they can’t improve and are truly performance outliers , don’t keep them, they will affect the over system.

The advice seemed valid, but I told him my company insisted we do performance appraisals. He laughed, he suggested I change the system; but Dr. Deming knew I worked for General Motors and that wouldn’t be easy. So he recommended I become a rebel and change my part of the system; which I did try. At the time I worked for one of the most progressive divisions within GM and was fortunate to work with many talented GM people and several well know and recognized experts, but I was convinced the best system change option was to leave GM.

Again, fortune smiled and I became part of a privately owned business that had a simple motto, ‘we take care of our employees, so they can take care of our customers’. As the leader of one of their business units I was given the freedom to change the appraisal system; I remembered Dr. Deming’s advice and implemented a very focused
quarterly/annual goal process for every level of the organization, yes, including associates in our plant. People were rewarded with annual pay increases and/or quarterly bonuses based on achievement against the goals (another discussion will surely follow on this point).

Performance appraisals were replaced with ‘development appraisals’ which focused on how they achieved the goals relative to company and team values, etc. Customer satisfaction and Teamwork where key values. Coaching was done throughout the year.. An employee education process and center soon followed to help employees and teams improve their performance; the company supported pursuit of undergraduate and advanced degrees and most important, partnering with nearby universities and professional associations to help every level of the organization improve and share our experiences with others.

Customer and employee satisfaction soared, we received numerous recognitions from our customers with invitations to attend some of their own internal events. In Fortune ‘s 1998 ‘Best Companies to Work For’ issue, the company was ranked number five – the company was Fel-Pro. The owners were great people and many benefits were made
available prior to initiating the above efforts, we started with a very good base. However, until we launched the above efforts many of the employees did not feel truly appreciated, they liked the company benefits but didn’t feel their contributions were valued.

Unfortunately, within months of receiving the Fortune recognition the company was acquired by a very large global company and what we called our industrial Camelot, came to an end.

For many, this still doesn’t answer some of performance appraisal questions, however, it does provide additional evidence that Dr. Deming did have some very good ideas and they could be implemented concerning improving employee performance. At a subsequent meeting, Dr. Deming responded to another person in regards to his comments on performance appraisal and indicated there is no perfect appraisal system and it was up to us to find a better solution, which he doubted would be perfect. His final comment to me – be a leader when it comes to people, not a critic. Of course, those of us who knew him and participated in his events, sometimes wondered if he practiced what he preached on this last point; I believe he just liked to challenge management to get them out of their mindset to pursue new a better ways of leading.

I am sure other people have similar stories to share and I hope this has helped.


Ron Kingen
Balance Engineering

Related: Curious Cat: Deming on Performance AppraisalsRighter Performance AppraisalProblems Caused by Performance AppraisalContinuous, Constructive FeedbackPerformance without Appraisal

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One Response to Deming and Performance Appraisal

  1. Matt Barney says:

    Dr. Deming intuitively understood many aspects of improvement and human behavior – I also found it hard to understand why he wouldn’t subject his 14 points to the same sort of hypothesis testing he would do in other domains.

    In the area of performance appraisal, there have been many useful studies on how to make the overall performance management process more effective on an ongoing basis, including the theoretical basis for why “in the moment” feedback is better than once a year. But there are still challenges with the actual measurement of individual performance. I’ve decided that it makes more sense to make sure the team performance goals are necessary and sufficient to realize firm-level goals, and to make sure the process capability of four dimensions – Quality, Cost, Quantity and Cycle time all are consistently performing to delight customers and shareholders.

    Once nice book on the science of performance management is by Jim Smither, Ph.D.

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