Do performance appraisals and systems thinking sit comfortably together?

[jmp4429]

In my opinion, performance evaluations and systems thinking could mesh very well if companies would stop trying to assign number values to things that can’t be measured. I’ve always hated performance evaluations where my communication skills were assigned a number from 1 to 5. The numbering system is arbitrary at best – what exactly does a 4 mean? Every time I saw the performance evaluation form at my old job, I wanted to start communicating using a 1 to 5 scale. “How likely are we to miss today’s shipment?” “On a scale of one to five, I’d say a 3.” “Is the radial riveter fixed?” “Oh, I’d say it’s about a 4.”

Fine, you’ve given me a score for my communication skills. Now WHAT EXACTLY DOES THAT MEAN!?

On the other hand, I do want a performance evaluation, and actually wish I could get one quarterly instead of yearly. It’s easy to lose track of your progress and goals if you don’t stop to look at them every now and again, and I want to know what my superiors think of my work. I feel like I can contribute better to the system if I am periodically reminded where my strong and weak points are.

I think the key here is that people want and need to know how they are doing (or how their boss perceives of it), but some insightful comments are infinitely preferable to an arbitrary “scoring system.”

 

[Mike S.]

A couple random thoughts on a busy day...

Formal performance appraisals poorly done can do more damage than not doing them at all. Most places I've worked required them in one form or another. My personal policy was to let the employee appraise themselves and compare it to my appraisal; I always did them on-time; I took notes throughout the time period the appraisal was covering so I had a fair analysis; and I let the employees under me anonymously appraise me and I reported on the results and acted on them.

Anyone with workers under them who says they do not do performance appraisals is, IMO, lying or mistaken. It may be informal, but you do them. Even the Mom and Pop place with 3 employees probably sees Mom and/or Pop deciding on a regular basis if their 3 employees are getting the job done well, poorly, excellently, etc. and doing something to act on that answer. If you have someone working for you who is doing a poor job, great job, whatever -- how would you ever come to that conclusion if you did not appriase their performance? What you do with that information is another matter entirely. But is it always "destructive"? No, of course not, IMO. It ain't always the system, folks, and that leaves what?

Here I go again disagreeing with a world-famous guru and legions of followers. (Ducking for cover)

 

[Steve Prevette]

Here I go again disagreeing with a world-famous guru and legions of followers. (Ducking for cover)

Actually, no need to duck for cover. The gurus agree that workers need feedback. They need much more realtime feedback that annually, so you hit the nail on the head saying you wanted to go more frequent.

The key is that an annual classification and/or ranking doesn't accomplish much. And it has been said the annual performance appraisal tries to do too much at once (I believe in The Team Handbook) - firing decisions, pay raise decisions, planning, and worker feedback, and does all poorly.

 

[JRKH]

So it sounds as if the problem is not the idea or the necessity of evaluations, but the methodologies used and what the evaluations are used for.

So - We've been hearing a lot of negative about these systems can anyone supply some positive examples. JMP4429 supplied a nice one. Also I have to say that my company's system is pretty good, and quite informal. Each year the Owner (yes we actually have one on site) sits down with the various supervisors and discusses each of their employees. The owner then sits down with each employee and discusses their performance with them. He then hands out raises based on these discussions and his own observations through the year. We have tried a more formal approach, but mostly I think the owner likes the informal, discussion approach. I for one cannot say I have been dissatisfied with the results.

How about it. Anyone else work where the system is pretty good?

James

 

[Steve Prevette]

I would suggest that a good system would have separate criteria and means for the things that the performance appraisal accomplishes. I think I am actually close to this in my place of work:

I have good interactions with the vice president of my group, and also keep all of the various "thank you" notes I get. I dutifully record all taskings and track them to closure. On a monthly basis I do supply a report of what I have been doing (including 3 charts - the chart of charts, cycle times on special taskings, and attendance at my monthly PI forum class) and what I may need help with. The government project is winding down at Hanford, but it seems like whenever they do a layoff, they reevalute folks each time, rather than keeping the performance appraisal results. And the decision for what to do for pay raises still seems disconnected from the appraisal even though they moved up the appraisal due date by 3 months so it would be done prior to "salary planning". So at least from where I sit, the right things seem to be happening, even if the formal appraisal process is a bit of a joke.

 

[Bill Pflanz]

When a company is doing downsizing, performance appraisal is only one factor in deciding who stays. Just like performance appraisals can be biased, so can the decision for layoffs.

Having good "performance" appraisals and receiving above average salary increases can cause your salary to be on the high side of the normal distribution for that job. The approach that a company takes for which employee to hire or keep may not be much different than obtaining a supplier based on price tag alone. Although you may be a good performer, some companies are always willing to bet they can get it done cheaper. It is probably not good systems thinking but it happens.

Performance appraisals also fail in the area of systems thinking since the goals are not really measures of performance but projects and activities that are checked off as completed at the end of a chosen time period. Generally they are individualized rather than team oriented. The goal becomes suboptimization of the individual's work at the expense of the entire system.

Rewarding increases in sales, production, profitability etc. when it is really normal variation is not systems thinking. The measures should be monitored over time and then the exceptional performance as shown by the control chart should be analyzed to determine what caused it. The problem that you encounter is that the improvement may be attributed to more than one cause or involve many individuals. It would be unlikely that one individual was responsible for the improvement but if the analysis does indicate that then the individual should be recognized. On the other side, individuals should not be punished for decreases when they are really normal variation.

The goal of any organization should be to stay in business. Besides the problems associated with annual performance appraisals, annual pay increases are not always consistent with staying in business. Each year, sales fluctuate, new competition occurs, and customer requirements change. None can be correlated with pay increases on a sustained basis. There probably is a need for regularly scheduled raises to keep competitive and prevent employee attrition but that is not related to performance.
Profit sharing based on the overall success of the company is probably more in line with systems thinking. That would result in widely fluctuating incomes which has its own problems.

As much as everyone would like to get above average annual raises forever, the hard truth is that businesses are rapidly changing and it is not always possible to stay in the same business with the same people and the same knowledge. If a company was truly using systems thinking, management would be looking ahead to determine how to prepare and train for the next change. The workers also have an obligation to change.

Bill Pflanz

 

[Wes Bucey]

Great analysis, Bill!
Yes, the manager who persists in individual performance evaluations is also the one most likely to be cold-hearted and ruthless when it comes time to pare the payroll.

The very same mentality that Deming warned about when proscribing buying goods on price alone is likely to carry over in employment decisions.

 

[Jim Wynne]

Rewarding increases in sales, production, profitability etc. when it is really normal variation is not systems thinking.

The essence of the problem condensed into a short but very significant statement. Not only is it not systems thinking, it reveals a profound misunderstanding of the nature of variation, and failure to understand variation always leads to waste, fear and loathing. Great post.

 

[Mike S.]

So - We've been hearing a lot of negative about these systems can anyone supply some positive examples.

How about it. Anyone else work where the system is pretty good?

James

At a former employer, the way I ran their system worked fairly well, in the opinion of the employees (see earlier post). Was it perfect? No way! Was it pretty good, more positive than negative? Yes. But much of it centered on simple, common-sense principals like the Golden Rule -- a foreign concept to too many managers.

 

[cncmarine]

The very same mentality that Deming warned about when proscribing buying goods on price alone is likely to carry over in employment decisions.

Wes can you please elaborate on the above.


In the majority of the companies that I have been involved with performance reviews = increase.(raise) The paper just gets in the way.

We can all sit through HR workshops and be educated about all the other benefits that motivate employees other then money. The health benefits go up every year, vacation days get trimmed and the biggest BS item in this world is profit sharing. In the small to medium manufacturing environment year to year profit sharing hardly ever happens. Also do not forget all the companies out there bailing out on there pension plans…


But the bottom line is….”Show me the Money” and I will stay.