MAKING THE DREADED PERFORMANCE APPRAISAL SYSTEM WORK FOR YOU!
Performance feedback is an important practice in many organizations in driving performance improvement. Performance management systems often have several objectives in an organisation. These could include talent identification and management, to address development needs or underperformance, to reward good performance and determine bonus allocation, an input to succession planning processes, identification of training or professional development plans or to address underperformance. Possibly performance management systems are applied simply because they always have been there, or because someone thinks they are an integral part of the human resources function.
Managers typically assume that providing employees with feedback about their performance makes it more likely that performance on the job will be improved.
Yet most HR practitioners would know that this accepted wisdom is being regularly challenged by a growing body of research around the ineffectiveness of most performance feedback practices. Despite this many organisations refuse to let go of them.
If you think it’s time to take aim at your organisation’s performance appraisal system, then here’s some ammunition you need to successfully challenge the status quo and replace it with a process that really works.
The research around performance feedback systems
As an HR practitioner you may have already read many articles around the ineffectiveness of performance appraisal systems.
DeNisi and Kluger reviewed over 300 papers on the effectiveness of performance feedback and found that that only around 30% of feedback interventions were effective, 30% had no impact and around 40% of feedback actually lowered subsequent performance – and it didn’t matter if that feedback was positive or negative![1]
[1]A S. DeNisi and A N. Kluger, Feedback effectiveness: Can 360-degree appraisals be improved? Academy of Management Executive. 2000. Vol. 14, No. 1
Does this mean that feedback is worthless? Well, we argue that performance management systems can improve performance, but often don’t, they are expensive, quite futile without follow up and can actually destroy shareholder value. However all is not lost – we can increases the chances that a performance management system will be effective provided we break a few rules upon which traditional systems are based. Let’s understand what’s going on in the brain first, then we’ll discuss ways to improve your current performance management system.
Brain Science
Neuroscience, or understanding how the brain works, gives us some clues as to what is going on when we experience feedback.
For instance, much of the motivation driving our behaviour is governed by an overarching organizing principle of the brain proposed by Evian Gordon in 2000, which is to minimise threat and maximise reward.[1] In other words, if a situation is seen as rewarding such as positive emotions, words, or activities, the brain engages and approaches the situation. However, when a situation brings up negative emotions or punishment the brain sends out an avoid response and detaches.
Can you see how this principle would apply in the provision of performance feedback?
Poorly designed feedback systems or poorly executed discussions around performance are likely to stimulate negative emotions such as fear, hostility, or a lack of fairness. Then there are threats to ego or self-concept in individuals, and threats to status, or bonuses, or anger around perceived unfairness with different standards of performance or reward outcomes across the organisation.
[1]Gordon, E. (2000). Integrative Neuroscience: Bringing together biological, psychological and clinical models of the human brain. Singapore: Harwood Academic Publishers.
For all their good intentions, performance reviews, constructive criticism, even unasked-for advice can therefore threaten status and cloud thinking. What happens when individuals feel threatened? The brain has engaged in negative responses and avoids or detaches. Individuals become defensive. Effective listening and constructive responses are the first casualty.
Consider the following examples of words often used or situations in which individuals find themselves, in appraisal discussions:
“It’s time for your performance review. Let’s meet in my office.”
“Can I give you some feedback?
“What you should do is…
(praise) but (followed by criticism)
Comments about personality or personal style attributes
Unexpected comments or uncertainty about what will be said
These words or situations will elicit an automatic, sometimes unconscious, fear response in our brain, will be seen as threatening and likely to elicit a defensive response.
The Business Impact
Why are performance appraisal discussions so threatening and how can they destroy shareholder value?
Our brain has evolved to create order from the world. Our brains love certainty. When we detect change, we automatically process it in the emotional region of our brain and unconsciously resist it. Threatening words or unexpected actions disturb our desire for certainty and activate the limbic system, a relatively primitive part of brain responsible for the fight, flight or freeze response. Further, when a leader triggers a threat response, the employee’s brain becomes much less efficient, less likely to be creative or develop insight.
On the other hand, when a leader enables employees to feel good about themselves, clarifies expectations and gives employees the latitude to make good decisions, they trigger a reward response in the brain. Individuals and others around them become more effective, more open to ideas and more creative.[1]
[1]D. Rock, (2009) Managing With The Brain in Mind, Strategy + Business, 56, p.4
Ultimately, this type of feedback is demotivating and causes disengagement. And there is a strong body of research demonstrating that employee engagement, loyalty and motivation are forces that drive performance outcomes [1] so performance management processes clearly impact shareholder value.
Where did we go wrong?
Many performance appraisals possess the following design flaws, which can be the kiss of death to any feedback system:
- They are top down and hierarchical, and could be an exercise in power and ego, which threatens the status of individuals.
- There are subjective differences in ratings across managers. Some managers simply rate others more harshly than do their peers, which is seen as unfair.
- Feedback may be given by a Manager who the recipient does not respect and so the individual is unlikely to accept the feedback.
- Performance review systems can be used to reinforce a command and control environment.
- They assess tasks plus personal attributes (behaviours) – tasks are fine, but focusing on the personal self is seen as threatening.
- They are often based on the perceptions of one individual. Many do not include multi-rater feedback, so there is a perception of personal bias of the feedback giver.
- They are often seen as an expedient method to decide pay increases or bonuses and so do not encourage full and frank discussion around weaknesses or areas for development.
- Their implementation may be something of a reason for existence in HR departments: a source of rather suspect legitimacy.
Building a better system
We can develop strategies and processes that are seen as rewarding and positive and engage the brain.
[1] eg. Research by Gallup, quoted in www.gallup.com.
Also F. F. Reichheld, Lead for Loyalty.
See also Hewitt & Associates’ research quoted in AON Australia.
A brain-aware feedback system is designed around minimizing threat and maximizing rewards for the individual. Features that do both include:
- Giving praise and recognition wherever this can be accomplished throughout the year. This increases our motivation and sense of reward.
- Instilling coaching skills in your managers to regularly (rather than annually) seek the views of their team members around how they feel about their work and their achievements. This approach decreases the threat of someone making top-down judgments and assessments of performance. Good coaching questions may include:“What are the things you have been doing that you are especially proud of?”
“Are there some things you would like to have accomplished but were unable to?”
“What do you think lay behind this?” and “What might you do differently next time?”
“What do you need from me or the organisation in order for you to achieve your goals for the next period?”
“In which areas would you like to develop your skills or expertise?”
“How can I help?”
- Focusing on tasks. Asking individuals to reflect on their own behaviours rather than imposing top-down judgments of behaviour is likely to be a less threatening approach.
- Linking discussions to the goals and drivers of the individual and what is important to them is much more likely to result in him or her listening to and responding positively to the feedback.
- Linking pay to market assessments around what jobs are worth, and absolutely objective measures of outcomes rather than performance appraisal outcomes.
- Focusing on strengths and their development, rather than rather less usefully trying to overcome deficits.
- Using several sources of feedback, such as views from customers, peers, subordinates and colleagues. In this way the feedback is perceived as more balanced, fairer and more complete.
- If there is a performance issue, address it at the time of the incident and use other HR processes, such as the counseling, warning or corrective action procedures you may have in place. In this way, all parties have clear expectations of what the discussion will be about and the performance management system can be used as a constructive means to engage in a positive, future-focused conversation.