The Trouble with Performance Reviews [the broken link was removed] by Jeffrey Pfeffer
The most basic problem is that performance appraisals often don’t accurately assess performance. More than two decades ago research done by professor David Schoorman showed that whether or not the supervisor had hired or inherited her employees was a better predictor of evaluation results than actual job performance.
Possibly the biggest issue, however, is that performance appraisals focus managers’ attention on precisely the wrong thing: individual people. As W. Edwards Deming, the father of the quality movement, taught a long time ago, company performance often results more from variations in systems than from the individuals doing the work. One of the reasons Toyota Motor has been so successful for decades—even as leaders have come and gone and the automobile market has changed—is that the fundamentals of the Toyota management system, which emphasizes quality, continuous improvement, and standardized tasks, provide the advantage. By focusing on the presumed deficiencies or strengths of people, individual performance reviews divert attention from the important task of eliminating the systemic causes, such as inferior technology, behind poor performance.
Another good article pointing out the harm of annual performance reviews. As I have said many times managers need to do better. See chapter 9 of the Leader’s Handbook and previous posts: Don’t Use Performance Appraisals – – Deming and Performance Appraisal – Find the Root Cause Instead of the Person to Blame – Performance Without Appraisal
I usually find it difficult to evaluate the effectiveness or even the potential effectiveness of performance appraisal. I can’t say I’ve ever come across one that was actually “liked” by any of the victims, but I can’t tell whether this is perpetual bad design, or that they are inherently pointless and counter-productive, or, often, that in an attempt to kill a number of incompatible birds with one stone, the system ends of being a total dogs dinner. Most often this means it will be linked to pay, increments or bonuses – and this ALWAYS causes deep rooted suspicion and operational shenanigans at appraisal times, when accusations of “quotas” and inconsistency are voiced
I guess that until I actually come across one that can be considered as “working well” I’d have to remain devoutly agnostic so far as Performance Appraisals are concerned
Reviewing your performance once or twice a year is not effective. Creates surprises. Doesn’t align well to changing business needs. Provides no way to coach someone. Timeliness of feedback is important. They say people react better to postive feedback and that you need to give 4 praises for every 1 coaching opportunity. Many reviews are too generic and don’t relate well to the varied job functions in a business
I especially like the section that talks about how they highlight the individual contributors – That would never happen in Toyota. I am sure companies don’t want to a organization of individual but more of teams, synergy, and systems.
The other way to think of this is that the annual review process is a batch process. In lean we want to create flow, so to that I would think communication should be daily/weekly just like the activities you might do in your organization.