Why are annual performance appraisals so time-consuming -- and so routinely useless?
Excellent question. First, let it be known that as a manager, there was nothing I hated more than writing and giving performance appraisals. As an employee, I desipise the self-evaluations (which I, being evil, somehow forget to write) and receiving performance reviews. I hate, hate, hate them and I agree with Mr. Hammond that they are time consuming and useless. But here is the short answer.
Appraisals are time consuming because managers fail to document performance throughout the year so they have to dig through old e-mails, projects, ect. for all 6 of their employees within a week's time. If they would document during the year, they would not be time consuming.
Appraisals are useless because managers don't use them throughout the year. If you would refer back to them regularly, they would be useful.
And now the long answer: There are many reasons HR wants you to do an annual appraisal. I'll try to list them here.
1. Managers fail to communicate with their employees. Shocking, I know, since none of you have ever had a manager who didn't communicate well. But, it's true. Managers are humans and nice humans tend to not want to say hurtful things to people. "Your work has not yet risen to the level of substandard" is not a nice thing to say. But, it needs to be said.
Managers need to deal with employee problems, and they don't unless forced to. Sure, if there is an incompetent employee, he'll get fewer and fewer key assignments, but no one will tell the poor person he's in the wrong job. Performance reviews force that to happen. Especially in companies where there is a forced ratings distribution and a certain number of employees have to be classified as "not meeting expectations."
On the flip side, there are great employees who don't know that they are doing a great job because their managers never tell them. These employees are frequently left on their own because the manager is too busy trying to deal with (albeit unobtrusively) the bad employee described above. Although the manager may be pleased as punch to have this type of employee on his team, he fails to mention it to the actual employee. Again, annual appraisals force this type of recognition as well.
2. Employees need to know what is expected of them. Generally, an annual performance review includes goals for the next year. This is frequently the only time an employee finds out exactly what his expected of her. She can tack this list to her cube wall and make sure she is making good progress in all areas.
The problem (and you knew there would be one) is that business needs can change rapidly and what your manager wrote in December may have no relevance to the work that needs to be done in June. A good manager will have regular one-on-one meetings with her employees and evaluate and change these annual goals as the need arises. Very few managers do this. If they would do this on there own, we HR types would get less fussy about annual appraisals. (Really, I'd suggest quarterly goal evaluation, but somehow I think that would cause MR. Hammonds to hyperventilate and I don't want to do that.)
3. Mr. Hammonds guesses reason 3 without even realizing it:
Companies, he says "are doing it to protect themselves against their own employees," he says. "They put a piece of paper between you and employees, so if you ever have a confrontation, you can go to the file and say, 'Here, I've documented this problem.' "
Lawsuits are a very real problem. EEO and OFCCP Audits are a very real thing. Perhaps Mr. Hammonds has never dealt with a lawsuit filed by the OFCCP (and he wouldn't, being a writer and all--the paperwork would go to HR and he would not know about it), but I have. One company I worked for successfully fought back and won a lawsuit filed by the OFCCP. We were able to prove we were not engaging in discriminatory practices by producing evidence. A good portion of the evidence was employee performance ratings (along with other things, such as length of time in job, education and prior experience). We could show that while some people were paid more than others, there was a high correlation between performance rating and pay.
Still, it took millions of dollars to "win" that lawsuit. (And I still have our outside counsel's phone number on my speed dial, even though I haven't talked to him in about 3 years. I'm scared to let it go.) Best not to get sued in the first place.
Now, I can hear Mr. Hammonds shouting, "then just give everyone a rating and skip the darn appraisal!" Sure. Let's do that. "Bob, as you know, employees are rated on a scale of 1 to 5, with 1 being 'exceeds expectation' and 5 being 'you want to start looking for a new job because you'll be fired within the month.' This year, you're a 4. Talk to you later!" Yes, yes, that would be effective. Even people with high ratings would not like it. "If I'm a 1, how come I'm not getting promoted? Where's my promotion?" Ahh, yes, managers still need to communicate with employees. And since you won't do it properly on your own, we'll require it of you.
A written appraisal (properly signed by the employee, manager and HR) can cover the company's rear end. We're sorry it needs to be done.
Performance appraisals can be extremely useful tools. They can open dialogues between manager and employee. They can serve as documentation for ratings. They can provide valuable information for future managers. They can help correct problems and they can reward good performance.
Notice I used the word "can" repeatedly in the above paragraph. Why? Because it's up to the manager and the employee to get use out of them. If your manager isn't using the review properly, ask for it. If you are a manager, make notes throughout the year, meet with your employees regularly and come year end--that darn thing will just write itself.