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2017 | Book

Introduction Read chapter Read first chapter

The End of Performance Appraisal

A Practitioners' Guide to Alternatives in Agile Organisations

Author: Armin Trost

Publisher: Springer International Publishing

Book Series : Management for Professionals

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book demonstrates, in detail, why annual performance appraisals might still work in hierarchical environments, but largely fail in agile ones. The annual performance appraisal is one of the world’s most widely used management tools. For many years, it was indeed seen as a pre-requisite for successful leadership and professional management. While most managers and employees have always been sceptical in this respect, those at a strategic level are now also realising it causes more harm than good, and a growing number of leading companies have similarly abolished this approach. One key reason lies in the changing working world, and the quest for greater organisational agility. Companies are moving away from rigid structuring. The arguments are presented objectively but with practical relevance, coherently illustrating the available alternatives for achieving what annual performance appraisals largely have not.

Table of Contents

Frontmatter
1. Introduction
Abstract
Every year, the same old scene plays out at almost every industry around the world, including Steven’s. Steven is a sales manager at an international automotive supplier. While at the airport waiting to board yet another plane, he checks his emails again. As always, there are too many. One comes from his HR manager, the so-called “HR Business Partner”, responsible for the International Sales division. Subject: Annual performance appraisal. The mailing list is long. It seems all the managers in his area have received the email. Steven can guess what is coming. “Dear manager, I wish to advise you that, as is the case every year, the annual performance appraisals are due to be conducted over the next few weeks. The link below will take you to the relevant forms for your staff members. It is important that all appraisals be completed by the end of January. Please also find attached some guidelines on conducting the annual performance appraisal”. This is followed by the usual motivational phrases about the appraisal’s great relevance in terms of leadership quality, performance culture, professionalism in dealings with employees, and the future of the company. Steven is already familiar with the guidelines from a compulsory training course for all managers. They state that goals must be formulated “SMARTly”, that feedback be given objectively, always starting with the positives, and so on. As he makes his way to his plane, Steven’s mind is racing. His diary is nearly booked up. Yes, appraisals are important. But what’s the purpose of it all? Has it really been a year already? It’ll be a bit difficult with Peter (one of his staff). It’s going to be a lot of work, but I’ll get through it, etc. As he takes his seat on the aeroplane, he quickly sends off an email to his assistant: “Hi Rita, please make one-hour appointments with all 17 staff from our team during the second half of January. Subject: Performance appraisal. More to follow. Thanks and regards, Steven. PS: Don’t forget that you and I also need an appointment ;-)”.
Armin Trost
2. The Annual Performance Appraisal System
Abstract
I have been attending HR conferences or speaking with HR professionals about their approaches for many years, and I frequently get the sinking feeling that I have heard everything being presented 100 times before. One in ten presentations will stimulate me and allow me to discover something really new: Wow, that company has broken new ground. That’s courageous. Respect. In some cases, it is the nature of the HR community to gear themselves around the practices of others. It creates an element of security. HR managers at SMEs in particular rarely have sparring partners on the same level as them at their company. So it’s no wonder that, to a certain extent, people try to achieve what others have already attempted. Science also tends to lag behind practice, rather than provide groundbreaking inspiration. Many consultancy companies have for years been adopting the same old HR approaches at a wide range of businesses. This increases their own security and sense of routine, and yields the desired profit margin. Given this rather unfortunate state of affairs, the only choice is for the HR world to very definitively gear itself around a few, barely distinguishable best practices. Although companies may differ in the manner in which they conduct their annual performance appraisals, there is a prototype variant approximating practice as a whole. If we look at what random businesses are doing in terms of the annual performance appraisal, it may come as a surprise to see how similar the approaches are. It thus seems appropriate to start with the traditional annual performance appraisal described below.
Armin Trost
3. Who Are the Customers of Performance Appraisals?
Abstract
HR management gives rise to what is probably one of the most niggling questions ever: Why are we doing what we’re doing, and for whom? CEOs or managers are advised to direct this question to their HR managers whenever there are HR activities or measures looming. The answers are particularly exciting when it comes to the annual performance appraisal. You could also ask the more specific question here of: Who would have a problem if we didn’t do it? You would receive a response listing a whole number of points. And who benefits? “Somehow, everyone does. The employees, the managers, the company”. It is common for these sorts of answers to be met with caution. At the end of the last chapter, the goals and purposes usually associated with annual performance appraisals were briefly outlined. This chapter will now pick up on these and discuss them in more detail. The benefit categories play a key role in the general argument raised by this book. It becomes clear that any thoughts regarding implementation must start with the intended benefit. Later in the book, I attempt to illustrate that, depending on the framework conditions at the company, alternative approaches may even seem a more appropriate way of achieving the benefits explored below.
Armin Trost
4. Relevant Framework Conditions of Performance Appraisals
Abstract
Anyone who examines annual performance appraisals more intensively, reads books about it, attends seminars, or consults various advisors will quickly get the impression that there’s just one right approach. Critical literature, on the other hand, often questions the fundamental benefit of this instrument in a rather polarising manner. But there’s no “one best way”, nor should annual performance appraisals be viewed as cure-alls or be flatly demonised across the board. We need to look into an organisation more closely, and understand relevant framework conditions.
Armin Trost
5. Possibilities and Limits of Traditional Performance Appraisals
Abstract
Does the annual performance appraisal help us understand each individual employee’s and entire teams’ needs for learning in an agile environment? Can managers in a hierarchical world identify their employees’ potentials? Are managers in these systems even the right authorities? Do goals also serve as motivation when employee tasks involve a high degree of process and results certainty? These are the sorts of questions which will be addressed in this chapter. The collective, central issue revolves around the notion of: For which types of benefits can the annual performance appraisal act as a suitable instrument in its traditional form? We will be looking at different framework conditions here, as addressed in Chap. 3. This chapter will also suggest some alternatives which may help meet the conventional benefit requirements in agile and hierarchical worlds.
Armin Trost
6. Better Alternatives to Performance Appraisal in an Agile Context
Abstract
The summary in the previous chapter was not very flattering for the annual performance appraisal. In hierarchical worlds, the annual performance appraisal only appears to work, to some degree, for very few benefits, while in agile settings, the traditional annual performance appraisal is largely a complete failure. Criticism of this instrument is nothing new, although various authors have focused on very different aspects. What we are now interested in, however, are the alternatives. Numerous authors who subscribe, at least in part, to the criticism of the annual performance appraisal see no possible alternatives. Well-known management mastermind Edward E. Lawler III hits the nail on the head in one of his blog entries for Forbes, entitled “Performance Appraisals Are Dead, Long Live Performance Management” (Lawler, 2012). He rightly states that talent management without systematic employee evaluation is inconceivable. He also mentions that goals are simply essential when it comes to successfully running any organisation, meaning companies which do not evaluate performance will not cope, whether they like it or not. And that’s why these sorts of instruments will continue to exist in the future. End of story.
Armin Trost
7. Conclusion and Final Remarks
Abstract
This book started off with the simple idea of managers discussing the basics with their employees away from everyday work as part of annual performance appraisals. It soon became clear that what initially comes across as a harmless meeting is actually a complex, integrated and institutionalised system consisting of target agreement, evaluation of performance, skills and potential, and much more. Experience has shown that the employees and managers involved do not always view this meeting favourably. The system sometimes even meets with fierce resistance, which some HR professionals often attribute to the relevant players’ supposed management incompetence. The aim of this book was to show that this resistance or lack of understanding should be taken seriously. There is a very high risk of the annual performance appraisal as a system conflicting directly with the existing or desired framework conditions. While it has chances of surviving at strictly hierarchical organisations, it remains well below expectations in a modern, agile work environment.
Armin Trost
Backmatter
Metadata
Title
The End of Performance Appraisal
Author
Armin Trost
Copyright Year
2017
Electronic ISBN
978-3-319-54235-5
Print ISBN
978-3-319-54234-8
DOI
https://doi.org/10.1007/978-3-319-54235-5