the most critical flaw of our old process was that the feedback itself was too infrequent and too far removed from the actual behavior to have any measurable impact on employee performance.
I decided to completely eliminate of our annual performance review process and replace it with a real-time performance feedback dashboard.”
I think this is a good move in the right direction. I personally think it is a mistake to make the measures focused on the person. There should be performance dashboards (with in-process and outcome measures) that provide insight into the state of the processes in the company. Let those working in those processes see, in real time, the situation, weaknesses, strengths… and take action as appropriate (short term quick fixes, longer term focus on areas for significant improvement…). It could be the company is doing this, the quick blog post is hardly a comprehensive look at their strategies. It does provide some interesting ideas.
Dr. Deming was, among other things a professor. He found the evaluation of professors by students an unimportant (and often counterproductive measure) – used in some places for awards and performance appraisal. He said for such a measure to be useful it should survey students 20 years later to see which professors made a difference to the students. Here is an interesting paper that explored some of these ideas. Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors by Scott E. Carrell, University of California, Davis and National Bureau of Economic Research; and James E. West, U.S. Air Force Academy:
our results indicate that professors who excel at promoting contemporaneous student achievement, on average, harm the subsequent performance of their students in more advanced classes. Academic rank, teaching experience, and terminal degree status of professors are negatively correlated with contemporaneous value”added but positively correlated with follow”on course value”added. Hence, students of less experienced instructors who do not possess a doctorate perform significantly better in the contemporaneous course but perform worse in the follow”on related curriculum.
Student evaluations are positively correlated with contemporaneous professor value”added and negatively correlated with follow”on student achievement. That is, students appear to reward higher grades in the introductory course but punish professors who increase deep learning (introductory course professor value”added in follow”on courses). Since many U.S. colleges and universities use student evaluations as a measurement of teaching quality for academic promotion and tenure decisions, this latter finding draws into question the value and accuracy of this practice.
These findings have broad implications for how students should be assessed and teacher quality measured.
Deming emphasized that forced rankings and other merit ratings that breed internal competition are bad management because they undermine motivation and breed contempt for management among people who, at least at first, were doing good work.
If you want to read the most compelling and complete case against the traditional performance evaluation, however,I suggest that you pre-order UCLA Professor Sam Culbert’s new book Get Rid of the Performance Review. He first made this argument in the Wall Street Journal, but the book digs into this argument in far more detail and offers solutions for managers and companies who want to replace the traditional review — or at least reduce the damage that they do. To help spread the word about the book, and to find out if as many people despise the performance review as Sam (and I) believe, he has — a bit like the ARSE — designed a ten-item test called How Much Do You Hate Performance Reviews? I just took it and scored a 36, which means I really hate them.
If you read this blog, you know I believe extrinsic motivation is a poor strategy. This TED webcast Dan Pink discusses studies showing extrinsic rewards failing. This is a great webcast, definitely worth 20 minutes of your time.
“you’ve got an incentive designed to sharpen thinking and accelerate creativity and it does just the opposite. It dulls thinking and blocks creativity… This has been replicated over and over and over again for nearly 40 years. These contingent motivators, if you do this then you get that, work in some circumstances but in a lot of tasks they actually either don’t work or, often, they do harm.”
“there is a mismatch between what science knows and what business does“
“This is a fact.”
What does Dan Pink recommend based on the research? Management should focus on providing workplaces where people have autonomy, mastery and purpose to build on intrinsic motivation.
Personally I believe all 7 of those diseases are still prevalent and causing damage. I do think some progress has been made on longer term thinking but far too many organizations still are extremely short term focused. And I would add two new deadly diseases of management: excessive executive compensation and an outdated intellectual property system.
Managers don’t like giving appraisals, and employees don’t like getting them. Perhaps they’re not liked because both parties suspect what the evidence has proved for decades: Traditional performance appraisals don’t work. But as my colleague and fellow Stanford professor Bob Sutton and I pointed out in our book, Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management, belief and conventional wisdom often trump the facts. And when it comes to performance evaluations, companies ranging from HR consulting firms to providers of software that automate the process have a big stake in their continued use.
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.
Toyota has developed a thought-controlled wheelchair (along with Japanese government research institute, RIKEN, and Genesis Research Institute). Honda has also developed a system that allows a person to control a robot through thoughts. Both companies continue to invest in innovation and science and engineering. The story of a bad economy and bad sales for a year or two is what you read in most newspapers. In my opinion the more important story is why Toyota and Honda will be dominant companies 20 years from now. And that story is based on their superior management and focus on long term success instead of short term quarterly results.
Yes Toyota can improve their performance, based on the last few years. Does management understand what they need to do? I think so. Does management understand that the system needs to be improved rather than the numbers on the spreadsheets of various managers have to be made better? I think so. Do I think most companies today, with bad results, understand the difference between bad numbers on spreadsheets that are used to judge various managers and a system that needs to be improved? No.
I do not believe the bad earnings for the last year for Toyota are indicative of a failed system. The results do show a weakness in the Toyota system that allowed them to perform this poorly during this credit crisis. The risk to Toyota’s future is that they become too focused on short term results, mistakenly thinking the problem to be fixed in the bad quarterly results recently. They need to focus on improving the system for the long term. And the recent experience likely shows some areas that need to be improved. But in no way do the fundamental tenants of the management system need to be changed. For many other companies today, changing fundamental aspects of their management is what is needed.
Various techniques are used to ensure a quality (no red bead) product. There are quality control inspectors, feedback to the workers, merit pay for superior performance, performance appraisals, procedure compliance, posters and quality programs. The foreman, quality control, and the workers all put forth their best efforts to produce a quality product. The experiment allows the demonstration of the effectiveness (or ineffectiveness) of the various methods.
To make my case, I offer seven reasons why I find performance reviews ill-advised and bogus.
Inevitably reviews are political and subjective, and create schisms in boss-employee relationships. The link between pay and performance is tenuous at best. And the notion of objectivity is absurd; people who switch jobs often get much different evaluations from their new bosses.
Raises are then determined by the boss, and the boss’s boss, largely as a result of the marketplace or the budget. The performance review is simply the place where the boss comes up with a story to justify the predetermined pay.
Managers can talk until they are blue in the face about the importance of positive team play at every level of the organization, but the team play that’s most critical to ensuring that an organization runs effectively is the one-on-one relationship between a boss and each of his or her subordinates. The performance review undermines that relationship.