BE THE BEST YOU CAN BE!
Originally published October 8, 2012 in "Canadian HR Reporter"
Of What Value are Performance Appraisals to Your Organization?
Human Resources textbooks state that performance appraisals (PAs) are necessary and particularly invaluable for programming and planning decisions. The Pulse Survey (October 2012) invited Canadian human resources professionals and their organizations to test this observation. Over 700 Canadian-based companies assesessed their reliance on PAs to make decisions on staffing, succession planning, training and leadership development and total compensation and policy development. Respondents added employee relations, technology, performance management, HR audits and organizational culture to the list of potential benefits.
The overall results in numbers and comments confirm that the process is perceived by managers (worldwide!) as nothing more than a stressful burden. Why? Unless conscientiously completed by all supervisory managers, the aggregate information does not accurately represent overall organizational needs.
There was a common theme of “inconsistency”. For example, inconsistency in:
• Reporting by managers within the required timeline
• Reporting of valid data
• Reliability of ratings for planning and decision-making
• Ability to provide constructive feedback to employees
• Following up on the PA process and applying the information
Only 7% of senior managers are very satisfied with the value of the PA results and onsider them to be indispensable. In these cases, the information drive compensation and succession planning decisions and financial investments in training and development. However, where regarded as a useless exercise, reliability is being questionned. Respondents ask of what value results be can the if a 20/70/10 distribution is required; the process is rushed; managers find it difficult to address performance deficiencies with honest feedback; or the PAs appear to be written for the reader and not the participants?
“Unfortunately, there appears to be too much bias in performance reviews. Employees who have a closer relationship with their manager almost always receive higher ratings. Furthermore, in a mid-sized organization where managers work very closely with their employees, they are reluctant to provide honest ratings if they know that it will negatively impact the employee’s earning potential.”
1. PAs are compulsory in 89% organizations but only 13% mete out serious consequences for managers who do not complete them.
2. 9% report that managers complete PAs on time, correctly and completely without prodding by HR while 15% are unlikely to complete them at all.
3. 34% organizations who do use PA data are somewhat satisfied with the quality of information while 28% are somewhat to very dissatisfied.
4. Finally, 59% of the senior team are relatively satisfied with the value of the PA results.
This last statistic sounds encouraging. In one case, a senior management team pressed for a formal and structured system following a consultative process with an enthusiastic staff, resulting in a competency based system with an objectives-setting step. Yet although unanimously approved, only one senior team member actually completed the appraisals for all of their employees. Why?
“Lack of time to devote to it, not wanting to engage in uncomfortable discussions
because they had never raised performance issues in the past
…. simply did not agree with (PAs)” !
It is difficult therefore to trust the rationale of planning decisions if based on PAs alone, even in organizations with best practices for design and implementation.
As the Survey discovered, 66% use PA results to identify training (employee development and growth) and 50% for identifying high potentials, 49% to determine compensation. On the other hand, they value the importance of the PA system to be higher, suggesting there is a need and perhaps a belief in a better system. But it also implies a greater number of companies amongst our Survey participants do not actively use PA information for any planning purposes.
“Evaluations are not done consistently across the organization,
many employees never have evaluations, many evaluations
are not taken seriously, and for those who that are completed
– the information is not shared with HR to be used for
developing future programs”
The evidence in this Survey points more and more to PAs as producing unreliable and inconsistent data, that is of little value to new programs or decisions, and that supervisory managers would rather not bother with. Are we incentivizing managers to complete PAs or to provide good information on PAs? How is quality measured? It seems results are based on the quantity that were completed instead of the quality received. No significant difference was seen amongst method of collection, or experience of HR professionals , whether CHRPs (60%), at mid-management and above (64%), and with more than 10 years of experience (69%).
Are these results somewhat unique to Ontario (80%), or more likely to occur in the private sector (60%)? Whether SME (55%) or large organization makes little difference So, clearly, more work is required to mitigate the lack of confidence in the PA system. But if we rely less on the performance appraisal as a formal and structured annual feedback session and more on goal setting and open dialogue on about needs, perhaps we would have better results.
As one respondent proudly declares:
“We institute ongoing dialogue, commend performance when appropriate,
provide open communication regarding compensation affordability,
encourage two-way communication and discussion, implement process
for creativity and sharing ideas to improve results”
This sounds like the ideal workplace culture and perhaps not realistic for all. But we can start by honestly questioning the value of PAs in our organizations. To what extent can they be relied upon to make valid and reliable compensation, succession planning and employee development decisions? Are we placing too much emphasis on the number completed rather than the quality of data? Does the quantity of completed returns provide usable information? Is it a make-work project inspired by HR textbooks?
Let us not demand more than can be realistically expected from managers. The real and only information they need to ask employees and follow up on, that benefits all of us: is how can I help you become the best that you can be? After all, isn’t that the real reason why we conduct performance appraisals?