I joined an interesting discussion at the Deming Institute official site on LinkedIn about performance appraisals. As expected in the Deming community no one spoke for the use of performance appraisals. However, a good list emerged of why organizations use them.
Here is what a contributor (John Schultz) defined as the reasons for why organizations have performance appraisals:
“When organizations are asked why performance appraisal is important. A variety of answers are put forward to bolster intentions and rationalize the scheme’s overriding purpose and legitimacy. These responses can be categorized accordingly:
• Improve performance. Give direction and focus to the workforce so quality, efficiency and effectiveness are increased with the ultimate goal of getting better organizational results.
• Enhance communication by providing routine feedback. Let the employee know how the organization is doing and how the individual is perceived as a contributor to organizational wellbeing.
• Provide a basis for compensation. Identify and respond to outstanding performance. Reward the most diligent employees with increases and bonuses so they and others will be motivated to continually do better.
• Assist staffing decisions by identifying those who are ready for promotion or layoff. It is thought that appraisal systems are fair enough and robust enough to provide rational information that will select employees for promotion or in many cases for layoff.
• Recognize and clarify training or education needs. Identify staffing and training needs, and assist employees with career development by recommending further education, instruction, tutoring, or mentoring.
• Create a paper trail that will legally document reasons for termination and defend against alleged unfair treatment. The appraisal system when properly administered should provide effective impartial and objective documentation that can serve as the foundation for employee removal or defend against perceived wrong doing.”
I believe this provides a pretty good summary of the majority of reasons for the existence of performance appraisals.
The question is “how to get rid of them?”
The short answer is to just get rid of them. However, this won’t happen unless you have an enlightened CEO like Robert Rodin of Marshall Industries. He got rid of them, but in a private reply to me he said it took a year of planning to accomplish.
Or Pluralsight where they really have never had them – but their attorneys wanted them. Funny thing, Dr. Deming had the same problem at Ford – the attorneys wouldn’t let them divest performance appraisals. Begs the question of having a great environment to work in vs. those that think they are protecting the organization.
I offer a different approach. I don’t believe that you can get the full benefit of Dr. Deming’s philosophy unless you do all the elements or with my method at least try them all. This is the subject of my ebook.
You don’t need to go cold turkey, but you can with the right leadership – some like Marshall Industries, Bama Companies and Pluralsight have accomplished this. However, for the rest of the organizations you can conduct a small scale pilot with a group of workers (and a couple managers) that can deliver end-to-end service to customers. You can design-out performance appraisals, bonuses, fear and use Dr. Deming’s principles as a guide. This gives you a chance to work through any issues that may arise. Performance using the Deming philosophy will improve along with morale, customer trust and management focus.
You can download the free ebook – The Service Cost Paradox.
What if you tried different design principles in your organization? Would you discover a better way to improve your service? The 95 Method is about giving you and your organization a method to help you answer these questions. You can start by downloading our free ebook or booking our on-site workshop. Tripp can be reached at firstname.lastname@example.org. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt