ASQ - Team and Workplace Excellence Forum

Online Edition - June 2000
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Issue Highlight - Safe Return Doubtful
--- Much of the attention in human resources seems to be about how to recruit and retain good people. The conventional wisdom is to offer people the possibility of big benefits and instant wealth.

In This Issue...
The Real World At MTV
A New American Revolution
Basic Training
Bringing Values To Life

Features...
Peter Block Column
Views for a Change

Pageturners
Briefcases
Sites Unseen
Diary of a Shutdown

A New American Revolution
The Abolition of Performance Appraisals

-A NWith the zeal of an early American patriot, perhaps Thomas Paine, author and attorney Tom Coens issues his challenge: "Abolish performance appraisals!" It is a kind of revolution he's advocating, based on solid common sense that Paine would have advocated.

-A N"Why are we having problems with performance appraisals?" he recently asked an audience. Soon heads were nodding in agreement that the annual or semi-annual rounds of forms, ratings and awkward conversations are a "hopeless ritual," viewed by many with the same enthusiasm as a root canal. In fact, workers and employers are dissatisfied with the process, he proclaims, often in numbers approaching 90 percent.

-A NCoens, a Michigan attorney whose 30-year career has focused on human resources, quality management and organizational change, can tick off a host of reasons why appraisals don't work. His forthcoming book, "Abolishing Performance Appraisals: Why They Backfire and What To Do Instead," co-authored with Mary Jenkins, comes down to three fundamental problems: (1) Managers cannot accurately assess workers' performances without bias; (2) the evaluation process often de-motivates more than motivates. "An appraisal," Coens has written, "can transform a vibrant, highly committed employee into a demoralized, indifferent wallflower who reads the want-ads on the weekend," and (3) the review process does not improve a company's performance, because individual improvement typically does not translate into better organizational results.

-A NWorst of all, appraisal is destructive to the human spirit. Coens cites improvement expert W. Edwards Deming: "[Performance appraisal] nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics. It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of a rating, unable to comprehend why they are inferior."

One Size Does Not Fit All
The performance appraisal process is premised on a series of faulty assumptions, Coens says. First and foremost, it assumes one process can serve multiple functions. Very few people would be interested in a clothing store selling one style of clothing in one size. We each have individual styles and shapes that mean our needs are many and varied.

-A NWhen he speaks, Coens asks audiences to describe the purpose of appraisals. At least a dozen suggestions are offered, from discipline and layoffs to coaching and training. That's quite a load for one system. In their book, after showing the fundamental problems with the process, Coens and Jenkins identify five principal functions that need to be addressed:

-A N-A N* Coaching Employees in the New Workplace
-A N-A N* Feedback that Makes a Difference
-A N-A N * How Do We Pay People Without Appraisals?
-A N-A N * Staffing, Promotions and Development
-A N-A N * Dispelling the Legal Myths and Dealing with Poor Performers

-A NPeople desire feedback, but one size definitely does not fit all. Coens urges "unbundling" the many complex functions that performance appraisals currently address and focusing on new processes to get them done. Of course, this can mean more complexity and more work. But Coens believes more and more organizations see the necessity of change.

-A N "I've sensed a shift. I've been working on this book for five years....in the early "90s, Mary Jenkins and I encountered a lot of resistance and concern. Recently there's much more receptivity to it. People tend to agree with a lot of the values and assumptions. When people understand that dropping appraisals does not mean dropping the functions which they are trying to serve, then people get pretty supportive."

-A NDetermining pay without appraisals, Coens says, may be the greatest challenge. "Some people believe you need to award people high pay raises according to their efforts in order to motivate them. Others feel if you don't reward people based on their contributions, it may de-motivate them because they will feel it's unfair."

-A NCoens maintains that you don't motivate workers with pay raises. There is no accurate way, he claims, to measure scientifically a worker's contributions and relate them to pay. What's more, "People's expectations are unrealistically high." Perhaps it's good old American optimism, but most people believe they are above the average.

-A N"Eighty percent of people believe they are in the top quarter of all performers. Ninety percent of people in professional and managerial jobs see themselves in the top 10 percent." So when people are asked about merit pay, everyone wants it. But when you point out that half the people in the room are below average, "they really start to drop their jaws."

-A NThere's another fundamental problem. "When you're giving people pay raises, you're believing that improving the parts will improve the whole." Coens argues that often processes and systems diminish individual performance. Critiquing individuals, he says, probably misses the point altogether.

-A NHe disputes the concept that people don't do the best job if they're not promised a carrot. Instead, he advocates, "Pay increases based on attainment of skills or taking a test, not a rating by your boss." In other words, workers get rewarded for longevity and growth. For instance, someone might handle a defined number of projects to qualify. Coens says, "It would be a question of verifying or not."

Common Sense
Coens offers common sense approaches to each of the functions that a performance appraisal is thought to address. For example, coaching needs to go well beyond the supervisor. "It will always work best if the request comes from the employee. Think about your own life. You don't go to one person for all the advice you need. If you need spiritual advice, you see your minister, priest or rabbi. If you need advice on dieting, you'd see a nutritionist." Often, today's supervisors are overwhelmed by sheer numbers of workers, or they might manage people with different skills than their own.

-A NCoens says audiences everywhere agree that supervisors have differing styles and that the supervisors must be willing to accommodate their employees. What works for one may be totally foreign to another, and what one employee finds helpful may be useless to another.

-A NThe best testimony to Coens' radical advice seems to be good results. He cites Gallery Furniture in Houston, which abolished performance appraisals in the mid-1990s. "They shifted to an intense customer focus," Coens says. "They've gone from $25 million to $100 million in sales over that period of time. Customers are delighted with the service and the quality they receive."

-A NCoens brings it down to a practical, pragmatic perspective. "We talk about empowerment today and about autonomy. They're good words. But we have to start dealing with reality. Any system that, across the board, requires people to fill out performance papers is probably not a good solution in the long run."

-A NCoens says appraisal systems can be replaced with something better. "You're not abolishing communications or paying people fairly. You're not abolishing a fair system for promotions. What you're doing is making all these functions work better."

-A NAnd even in America, that's a remarkable, revolutionary idea.

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