Benefits and Compensation

Should We Ditch the Dreaded Performance Appraisal?


In today’s Advisor, BLR® Legal Editor Holly Jones, JD, outlines challenges of appraisal systems and offers tips for making them meaningful.

Don’t worry, she says, skepticism about appraisals is not unusual. A Google search on performance appraisals will return numerous articles calling for the death of the performance review, a defunct management ritual that is merely a sign of stale leadership and a lack of innovation in HR practices.

Various surveys report that 98 percent of employees dread them, 14 percent of employers don’t even have them (and even among those employers that do, 12 percent of employees still don’t receive feedback), and more than half of employees who do receive evaluations believe that the results are not fair or accurate.

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Even the Superstars Struggle Sometimes

Yahoo! CEO Marissa Meyer recently came under fire yet again for her efforts to improve productivity on the Yahoo! campus—this time for her adoption of a particularly unpopular method of performance appraisal.

Under the controversial Quarterly Performance Review (QPR) system, Yahoo! managers are required to rank employees along a bell curve, meaning that half the workforce will be ranked as meeting expectations (or, in Yahoo’s terms, “Achieves,”) while at least 15 percent must be ranked below the average (either as “Occasionally Misses” or “Misses”). This type of “stack-ranking” appraisal system has also been blamed for the decline in productivity at another big-name tech company: Microsoft.

The Yahoo! controversy is two-fold. First, and unsurprisingly, some managers genuinely believe that all of their employees are at least meeting expectations (or Achieving) if not exceeding or greatly exceeding those expectations. Yet the review system requires those managers to assign lower rankings in order to meet the required bell curve distribution.

Second, a series of firings and layoffs that have occurred contemporaneously to the use of the QPR system have, whether accurate or not, left managers and employees with the impression that receiving one of the lower rankings for two consecutive quarterly review periods is a death sentence for the worker’s employment at Yahoo!.

Even amid peer and middle-management admissions that some of the Yahoo! workforce is “dead weight” in need of trimming, the uncertainty of the relationship between the QPR system and further employment has had a chilling effect on morale and further productivity—exactly the opposite effect that a performance appraisal should have.

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They’re Not a Task, They’re an Investment

If you’re going to conduct performance reviews—no, scratch that—if you’re going to invest in performance reviews, it is only sensible to use the time and resources necessary to make them worthwhile. Because performance reviews are just that—an investment.

Consider the time that HR and management professionals put into collecting and delivering appraisals, the effect on company productivity and morale in the weeks of preparation for the reviews, as well as the impact that a presumably unfair system can have on your workforce for weeks—even months—after the appraisal is conducted. This is an expensive endeavor.

Then consider the benefits that an effective system could bring—a staff full of employees who receive timely and effective communication when improvement is needed, who are well-matched with appropriate tasks for their skill sets, and who enjoy a sense of challenge and ownership brought about by improvement and advancement goals for the future.

In tomorrow’s Advisor, Jones’s tips for a meaningful performance appraisal process plus an introduction to a timely webinar covering your biggest hassle—FMLA intermittent and reduced schedule leave.

1 thought on “Should We Ditch the Dreaded Performance Appraisal?”

  1. It certainly seems like QPR is horrible for morale. Was it Microsoft where the company ended the practice, and then employees finally came out about how much they hated it and felt it undermined collaboration and productivity?

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