Eight Key Reasons Why Performance Appraisals Fail

Performance appraisals are in trouble and sinking fast. They negatively affect workplace relationships and they do not support goal achievement. I recently wrote an article on responses to performance management in which I demonstrated the impact of this systemic failure. Everyone from employee to manager to human resources practitioner dislikes them.

It is a puzzle. Newly designed and implemented performance appraisal systems are expected to be different from the norm, and yet they persistently fail and lose all credibility with their intended users. Here I put in a nutshell my view on the causes of this failure to meet expectations.

Recency effect and other biases
Through credible research, we know that extraneous factors not related to actual performance influence managers inadvertently and unconsciously. Such factors include the passage of time; the most recent performance/behavior is front of mind with other actions forgotten or diminished. Two other common bias factors are the halo and contrast effects.

What feedback?
Some managers don't believe in the necessity of giving feedback and others think the only time feedback needs to be given is at the yearly appraisal meeting.

Emotional pressure cooker
Managers who avoid addressing performance problems in a timely manner often build up suppressed frustration. All that tension is uncorked at appraisal time and overwhelms the employee by the emotional outburst that results.

Failure to service the system
Inattention to the organization's systems – in their component parts and as a whole – causes close to 80% of performance disappointments. Looking to the individual for an explanation, we fail to see that the system itself is ailing and failing all of us.

Team vs. individual
People working together is essential for business success. By focusing on the individuals and their performance in isolation, we miss the opportunity to improve team cohesion and co-operation.

Subsidizing subversion
Pay someone to be excellent and you often open the door to competitive and dysfunctional behavior. Employees find ways of undermining their "competitors" through rumor mongering, not sharing useful information and manipulating goals and measures (under-promise and over-deliver). Rewarding employees financially is often a counterproductive way of encouraging co-operation towards a common purpose.

Buying emotional hooks vs. rewarding performance
Ego, status and feel-good triggers all too often motivate employees who work for monetary rewards, which take the eye off the true priority: excellence in performance.

Last year's bonus is this year's standard
Pattern-recognition is typically a human strength. We see a pattern; we create a rule, and sometimes it is wrong - it wasn't really a pattern. Employees quickly start assuming they are entitled to the same bonus as the previous year, regardless of reality.

Next time, I will share my thoughts on effective performance management systems.

Have you experienced additional problems with your performance appraisal process? How were they resolved? Please tell us about it.

Find out more about encouraging peak performance without spending out on huge bonuses. Check out our guide, 2 Way Feedback, at http://www.businessperform.com/products/2way-communication/