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Apr 09, 2014, 04.53 PM IST | Source: Moneycontrol.com

Job performance appraisals: How much should you expect?

A psychology study by Kansas State University, Texas A&M University and Eastern Kentucky University examined how subordinates responded to their manager’s negative feedback during performance reviews.

Jappreet Sethi

HR & Business Strategy Professional

More about the Expert...

Jappreet Sethi

  Though performance appraisals are established tools and used universally, some experts are questioning them and the need for them. Over time more and more companies have decided to change their performance appraisal processes. Recent research has concluded that the conventional performance appraisal system is flawed and contrasting unfavourably with our vision-based, value-driven and combined work environments. Many also state that this method of performance review does not improve performance but in fact reduces it.
  
Performance appraisals date back as far as the 3rd century, when the Industrial Revolution had begun in China. However, they become popular only by the 1980s, when performance appraisals in the form of GE’s CEO Jack Welsh’s ‘rank and yank’ system were widely used in organizations.

A psychology study by Kansas State University, Texas A&M University and Eastern Kentucky University examined how subordinates responded to their manager’s negative feedback during performance reviews. It was found that employees who held a desire to learn and grow (often the better employees) were very distressed at negative feedback and felt discouraged.

The conclusion was backed by a study by Stanford University which concluded that performance evaluations destroyed internal competition; a factor that actually aids the fostering of a knowledge-sharing culture. In an article published in The Psychological Bulletin, a meta-analysis of 607 studies of performance evaluations was carried out.

The conclusion was that about 30 per cent of performance reviews resulted in decreased employee performance. Another study shows that when a person’s status is threatened, activity levels diminish in some parts of the brain as many employees are not able to accept ‘constructive feedback’ constructively. 

In 1733, Abraham de Moivre developed the Bell Curve, which was used to observe the planets, determine population statistics and finally to evaluate individual intelligence and performance. This theory was questioned by Josh Bersin in his article which stated that the curve does not accurately reflect the way individuals perform, and that because of this many HR departments and business leaders wind up compromising employee performance and happiness.

Thus, to summarize, below are the three main reasons why performance appraisals are not accurate indicators for employee development:

Necessity of feedback: For efficiency, it is important for managers to establish feedback loops between themselves and the reporting structure. Both formal and informal constructive criticism helps managers and subordinates understand work progress, and variations can improve the overall performance. Thus, the importance of regular feedback cannot be ignored and must be encouraged on a regular basis.

Feedback accuracy and timeliness: Feedback must be effective, fair and delivered in a timely manner. Managers must ensure the feedback reports keep coming in regularly. Moreover, appropriate timing is as important as the genuineness and truthfulness of the feedback, making annual or semi-annual feedback reviews less important.    

Formal performance appraisal systems seeks objectivity: These systems actually tend to diminish the direct manager-subordinate relationship. Most subordinates would prefer casual feedback. For example: a small chat at the tea counter about the work that is been done and how progress could be made is more appreciated and encouraging. Regular feedback ensures a friendly relationship between the manager and subordinate, and also helps encourage employees and provide them with guidance. Moreover, in many cases, formal appraisal systems can have a negative impact that can lead to a diminishing manager-direct report relationship.

Thus, business leaders must consider alternating their performance appraisal systems. As per Bersin, if you want to develop good employees who perform, it is important to focus on teamwork, coaching, professional development and empowerment. This cannot be achieved simply by implementing a formal appraisal system. Moreover, it is very important for managers to focus on the right things, and on creating a strong link between themselves and their subordinates.

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