By: Harrison Barnes, Managing Director - BCG Attorney Search
The use of performance appraisals as a tool to improve performance management may be overrated or misunderstood. Hard research shows performance appraisals have negative effects on employee populations more often than having positive outcomes. As a result, employers and human resources departments are having a fresh look at this essential tool of human resources management. This article takes a look at three major myths of performance appraisal that lead to its misuse.
Myth 1: Annual appraisals align the company
The truth is annual appraisals often misalign the company. It is often difficult for employees to know in the first quarter how project priorities are going to change in the fourth quarter. Annual metrics makes sense only for senior executives because longer performance cycles are applicable to higher organizational positions and not to the grassroots.
For employees who work in short performance cycles, setting and keeping to an annual plan guarantees misalignment with a company's changing business needs. The only way out is to set ambiguous goals that can pay lip service to both the annual plan as well as contingent changes. But when you think of it, ambiguous goals never drive performance.
Myth 2: Annual appraisals are the right method for assessing employees
They don't even appraise the performance of school children on annual reports, but most companies still cling to them. The reality is most employees do not perceive annual appraisal ratings as valid. And thus the sense of rewards being unfair spreads and persists in workplaces.
Research shows nine out of ten employees do not believe that they received the performance ratings they deserve from annual appraisals.
Since perception is reality when it comes to motivation, annual appraisals fail to improve performance.
Myth 3: Forced distribution ensures fairness of pay
In reality, forced distributions guarantee demotivation and reduced cooperation. Much research has been done on this, and this is proved, but companies continue to ignore the findings.
In general, an average employee is known to see himself as better-than-average when comparing himself to his peers voluntarily. This provides motivation to a great extent in average employees. However, performance appraisals unsupported by meticulous data that is accepted by the employee, demotivates when it accurately appraises his performance as average.
In general, when meticulous appraisals are made, only the top ten percent are left feeling good about themselves, and the rest of the workforce feels dejected and unable to cope with the findings. Such a workplace situation does not provide success to a workplace where people have to give their best.
Performance appraisals need to be realigned in today's environment and myths busted. Otherwise, these appraisals will have adverse effects on employers and employees.
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