Managing Design 4-20-98Managing Design 4-20-98

April 20, 1998 Design News

MANAGING DESIGN Tips on guiding product development

Performance evaluation: a new ball game

Ted Gautschi Consultant Wellesley Hills, MA

Every associate (or "employee") on the job wants to know how well they are doing. They want to know how the organization perceives them, how they can increase their value to the organization, what the future holds for them, and whether they receive fair compensation.

Don't blame the racket. In the "old world" (pre-1990s), most U.S. firms used some sort of performance appraisal program to satisfy these same wants. These programs had names like performance evaluation, performance appraisal, salary review, merit rating, counseling, and performance review. However, these programs often proved unsatisfactory and disappointing. Some critics even suggested abandoning all such programs as a lost cause, which makes about as much sense as if I decided to destroy my tennis racket because it didn't make good shots. Instead, what I should do is stop blaming my racket and learn to play the game of tennis properly.

So many demands were made on supervisors that they had difficulty keeping their subordinates informed about their work quality, or even follow what they were supposed to do. As a result, the appraisal and interview were often specified as policy by many firms.This, they felt, would assure that supervisors got together with their subordinates at least annually to discuss what they should be doing, and how well they had been doing it.

Many supervisors were reluctant to conduct performance evaluations with their subordinates because they had little training or motivation to do the task. Too often a performance evaluation became a confrontation between the supervisor and the subordinate, even when the employee was asked to fill out the "form" and compare answers with the supervisor as part of the evaluation.

Many supervisors did not understand the purpose or usefulness of performance evaluation. They simply accepted it as a ritualistic exercise in which they must participate to satisfy management so that they could obtain salary increases for their subordinates. They did not realize what a powerful tool evaluation could be when used properly.

Unknown objectives. The basic problem was that too many firms did not realize that there were three multiple objectives for the evaluation process: (1) to record the employee's overall rating permanently in their file and prove that an evaluation had been held; (2) to serve as a documented base for all merit salary increases and future human resource planning; and (3) to encourage a series of private one-on-one meetings between each subordinate and his/her supervisor to assure mutual agreement on what the subordinate should be doing and how well he/she was doing it.

Since the first two objectives were more easily understood and could be accomplished more or less mechanically with little stress, they usually received the highest priority and the bulk of the attention. The third objective often received little attention.

The organization usually got what it demanded. The first two objective were usually were usually demanded by an approved procedure, while individual supervisors often decided whether to pursue the third.

We will explore the difficulties of "new world" evaluations in a future column.

Ask the Manager

Q: What exactly is an 'old world' performance evaluation ?

A: My company reviews salaried personnel every 12 months. The personnel department sends a notice to the individual's supervisor when the review is due. The supervisor then performs the review and sends the result to the personnel department. The review becomes a "must-do" task for the supervisor. Any further significance is left to his/her discretion.

The reward associated with the review is a merit increase--a sum added to the standard across-the-board pay-scale change that compensates all employees for inflation. Only about one-third of any increase is in the form of reward based on performance. This practice reduces the importance of any performance evaluation.

Our firm uses a review form that has graphic rating scales for several key items: quality of output, productivity, attitude, technical ability, judgment/maturity, versatility/flexibility, attendance, initiative, dependability, relationships, leadership, communication and organization skills, and planning. The performance factors are combined into an overall rating that ranges from outstanding to satisfactory. Sometimes narratives accompany growth and improvement sections to personalize the process.

The actual review and subsequent financial reward does not start with the form, or with the rating procedure. Every year when the firm's budget is approved, upper management ranks each organization member into various salary levels. Reviews are molded to fit the financial plan. Knowledge of this ranking and its timing reduces the importance subordinates place on reviews. In a sense, the entire process is a charade.