Debunking urban myths in management wisdom I

Myth 1:
People Performance Assessments by superiors are necessary, motivating and a good way for providing a base for variable pay incl. bonuses ea., promotion, improvement and feedback.

It is astonishing how resistant the performance assessment myth is against change or elimination.

Deming already railed against the practice over 30 years ago, experiences in organizations suggested, for a while now, that there is something seriously wrong with it, and recently there is a resurgence of articles in journals such as HBR strongly suggesting to eliminate the practice, while presenting it at the same time as a new idea.

Nevertheless, with a few exceptions and a number of changes to the straight forward ‘compliance interview’ model,  performance assessments in general
are still going strong, with people mangers claiming the lack of an alternative when questioned.

This state of affairs is not only astonishing in itself, it is puzzling as people performance assessments in their current forms are seriously problematic on so many levels that it is mind-boggling to think how they ever survived at all.

Now, in order to debunk this, allow me to take it from the top.

To agree with Deming, performance assessment should assess performance, nothing else. Bundling the results of these assessments especially with promotion and pay is seriously problematic. To the first, performance in a current position has nothing whatsoever to do with the performance requirements in another position. As they say in financial circles – past performance is no indication of future performance. So it does make no sense whatsoever to link the results of performance assessments to promotion decisions. A strong case to decouple.
To the second, countless studies over the last decades provided no evidence whatsoever that linking pay to performance is positively correlated. Multiple studies provided ample evidence to the contrary, as soon as job requirements exceeded absolutely basic menial tasks, and in today’s work environment this is overwhelmingly a given. Again a very strong case for decoupling.

What is left, is the performance assessment per se. And here we are running into three main issues. One, what actually constitutes performance; two, who can, or rather should, assess it; and three,  what is to do with the outcome of it.

As to performance, we are entering a real minefield. Let’s take the two dominant schools of thought. One – performance is achieved when set targets, KPIs, are reached or exceeded. Two – over the last decade a lot of psycho-bubble and political correctness has cluttered some performance assessments into formats that go beyond but still include KPI achievements. Both forms are seriously problematic.
The first actually measures compliance not performance, as reaching targets does not constitute performance; the second adds a lot of traits and behavioral issues to performance which would be better, and we believe more correctly, addressed as organizational culture issues rather than individual performance matters. It also unnecessarily complicates, what, we believe, is a straight forward matter.

What constitutes performance in people – employees, subject matter experts and managers alike?
First they have to be competent – a no-brainer, but surprisingly difficult in reality – which means the processes in their process map are statistically stable; second, they have to be able to continuously improve these processes by reducing complexity and better ways to create the same output; thirdly, most rarely present or recognized, they have to be able to innovate on their process output – they have to be able to investigate whether their output is still valuable to their performance stakeholders and revise their process map accordingly if not. The whole thing has nothing to do with achieving targets or KPIs.  These measures are not only damaging; they are irrelevant for performance.

If one accepts the above, it suddenly becomes quite clear who does the assessment. Throw out the old hierarchical thinking, it does not aid actual performance. Real assessment of performance is to be continuous. Processes are managed, measured and maintained by each process owner, as is the need and requisite process innovation upon investigation. Output quality and value is measured and assessed by the relevant performance stakeholder either continuously or upon inquiry.
The only task of the strategic manager is to ensure it is actually happening and the people have the requisite competencies.

Assessments done in that way are feedback response loops which simply serve to improve performance under autopilot, so the question of what to do with performance assessment outputs does not really occur as the formal performance assessment as separate management exercise no longer exists as necessary or beneficial.

So the only recommendation we can give for changing or improving formalized performance assessments is to scrap them. Fast.
They really serve no valid purpose and, as Deming already said 30 years ago, are probably the single most demotivating and demoralizing exercises undertaken in an organization.

As always we really encourage and seek feedback and discussion both on- and off-line.

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