Performance Appraisal in the Competitive 21st Century

by Harvey Wigder

These are competitive times. In today's world, our only job security comes from the skills we offer in the workplace and our ability to implement them. This new reality can help the supervisor reframe interaction with employees and convert the annual tug-of-war called performance appraisal into a win-win transaction. The old paradigm had the supervisor evaluate performance primarily for compensation purposes. This is still required in most organizations. However, new times permit a more powerful and constructive framework.

We propose that the appraisal is a benefit. Employees can enhance their value to their employer, and in the marketplace, by calling on their supervisors for career development help.

Ironically, two of the factors that inhibited good performance appraisal in the past need not have the same effect in the nineties. These factors are an inappropriate view of motivation and the economics of the pay raise. The third factor, the inattention and lack of skill of the supervisor to facilitate development, remains critical.

Motivation and Economics

The prevalent use of performance appraisal is to justify salary adjustments. The supervisor tells the employee how well that the employee has performed and what improvement is needed in order to get a better appraisal (and a bigger raise) in the following year.

If the objective is also to develop skills, there are two flaws in this approach.

Bad economics. Conflicts about the performance appraisal driven by money are less relevant today they were in the past. These days, there isn't much money for salary increases. For the employee, the crucial financial issues have become keeping a job and improving market value. Although a raise is nice, it has less impact than in the past.

Inappropriate model of motivation. The standard motivation model on which most performance appraisals are based assumes that people will change the things a supervisor tells them to change. That is an inadequate model of motivation. People change when they are forced to change or believe in the reason for change. When people want to change, they seek out supervisors and others for input. When they do not want to change, they experience feedback as criticism.

The supervisor is responsible for representing the organization in organizing work and in providing feedback to employees about the quality of their performance. The employee is the one who must take charge of career development.

The new model we proposed is to treat performance appraisal as a benefit and to work with those employees who express the desire to enhance their skills. The best a supervisor can do is to provide accurate input and careful feedback. The appraisal will lead to change if the employee wants change.

Supervisory Skill

It takes complex skills for the supervisor to be effective in supporting employee development. An inappropriate model of motivation--that the supervisor can motivate the employee to change--makes the job more difficult. Developing employees is not easy even when the employee is motivated to grow. The required skills for developing employees are:

Understanding job requirements. This starts with being clear about what the job involves and with performance standards. This seems straightforward, but is often elusive. Many "performance problems" start with lack of clarity about the job.

Good diagnosis. This involves understanding what factors, external to the employee and internal (skills, attitudes, motivation) lead to a high level of performance. Good diagnosis leads to accurate identification of what to change.

Good coaching and mentoring. This involves helping an employee understand what needs to be improved and giving appropriate help in making the improvements.

In Conclusion

Appraisal and development skills are complex and difficult to master. The paradigm proposed here starts with the notion that the employee is responsible for career development and will only change when motivated to do so.

Career development is more important than ever. As a matter of policy, companies cannot and should not ignore the importance of developing their employees' skills. Organizations who master this process have a decided competitive advantage.

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