I copied this post from a forum entry that I made in the Harvard business school working knowledge newsletter. The topic is performance appraisals. You can see the whole topic at http://hbswk.hbs.edu/item/5563.html.
In a perfect world we would talk to each other. Simple, respectful, daily conversations. Have conversations about performance, goals, expectations, rewards, recognition, and about individuals as people. If we all did this, appraisals would not be so traumatic for managers. I suspect that those who in this forum have indicated that they embrace performance appraisals also talk with their team members, not once a year but daily. I too do just that; continuously talk with my team members so that they always know where they stand and where they can improve.
With that said, I seem to remember, maybe someone here can quote the statistics, that 85% of managers do not discipline employees because they do not like confrontation. If that is the case, 85% of managers will always have a hard time with performance appraisals. If this is indeed the case, we can not as managers and leaders simply expect that everyone will jump on the performance appraisal bandwagon. So what do we do?
I like tools and processes to help managers focus on team member’s development. We also might consider aligning our expectations of our managers with their rewards so that they are rewarded for and focus on the development of their people rather than solely focus on management tasks. Add coaching and training in performance appraisals and combine with processes and tools to help with the performance appraisal process and we just might help all managers become effective in the process.
Forced ranking is quite another thing altogether. It is a tool and a process so it does help facilitate the performance appraisal system. In a perfect world it would be unnecessary I believe. I am uncomfortable with the process because it seems like a substitute for regular conversations…an easy way out. I have seen other performance appraisal tools and processes that are robust, easy to use, aligned with corporate goals and objectives, and are effective without forced ranking. So for now I am a bit ambivalent about forced ranking.
Untying financial increases from the performance appraisal is one way to create a less threatening environment for managers. Tie financial increases to enterprise and/or team performance with a component of personal performance. Tie to skill, competency, or education improvement. There are several ways to go about this. Probably a matrix approach would be best. Just as with executive compensation, if you reward only on one dimension, you will see all decisions skewed in that one direction. If the rewards are balanced and are designed to drive fulfillment of the goals, objectives, values, and vision of the organization, the negative stress created by out of alignment expectations and rewards will be greatly reduced.