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Bacal & Associates 
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(204) 888-9290 

Performance Appraisal 

Why Ratings Based Appraisals Fail

In the January edition of The Public Sector Manager/Workplace2001 newsletters, we discussed why the use of RANKING procedures to compare employees to each other can create disastrous consequences. Fortunately, ranking systems for performance appraisal aren't used that frequently compared to the use of RATING systems. Unfortunately, RATING systems are also problematic, and are used in a huge number of organizations.

First, what is the difference between a ranking and a rating system? A ranking system evaluates employees based on whether they are better, equal or worse than their peers. It is a comparison. A rating system compares employee performance to some set of criterion, and produces either a number or a letter grade that supposedly represents the employee's level of performance. With a RANKING system it isn't really possible for everyone to be ranked as excellent (or at the top of the heap), even if all employees are excellent. A rating system permits everyone to be rated highly, if they warrant it.

Rating systems are so popular that computer programs have been developed to undertake the evaluations. In addition, most 360 evaluation processes are based on ratings systems, with the ratings obtained by not just the supervisor, but peers, customers, etc.

The question is whether they "work".

Problem One: Appearance of Objectivity

In our organizations we have legal and philosophical pressure to evaluate employees in an objective, consistent and fair way. There is no question that being objective is critical. Because of our desire to conform to those needs, we create systems that use numerical scales (for example 1-5) to evaluate employees. As an example, the University of California uses the following rating categories (in addition to some other components):
 

• Job knowledge: Evaluate the use of information, procedures...etc required for current jobs.
• Quality: Evaluate the accuracy, completeness, etc of work.
• Planning/Organization: Consider areas such as varying work demands, developing efficient measures,...
• Initiative: Consider the self-starting ability, resourcefulness, and creativity applied to the duties of the position.

If you look carefully at the criteria above, you will see that they don't eliminate subjective judgements at all. One manager's idea of "self-starting ability" can be quite different than another's idea. How does one objectively evaluate "creativity".

This wouldn't be a major problem except that often we act as if the ratings ARE objective. We make pay and promotion decisions on information that is at best quite subjective. We forget that any rating is only an indication of how one person (the manager) applies a fuzzy criterion. In terms of legal consequences, a poorly and badly designed set of criterion is probably not sufficient to protect an employer. Dismissing an employee based on, let's say, a low ranking on creativity is going to be really problematic unless one can justify that rating in terms of hard, concrete events (failed to create a new product between January and December). But if we use the criterion above, we don't need rankings.

Ratings systems give people a false sense of security, protection and objectivity.

Problem Two: Development Issues

One function of performance appraisals is to help employees develop so they can contribute more effectively. Do rating systems, in and of themselves, contribute to employee development? The answer is No.

In order for staff to develop and learn they need to know what they need to change, where (specifically) they have fallen short, and what they need to do. If a manager assigns a 1 (unsatisfactory) on a scale of 5 to the dependability criterion, what information does that convey (by itself) to the employee? Not much. It just says the manager is dissatisfied with something. In order to make it meaningful and promote growth, far more information must be added to the appraisal process. When were they undependable? In what very specific ways? What changes need to occur? Those are the critical growth questions.

One argument offered by ratings proponents that the manager can use the rating scale as a springboard to discuss those details. That's true. However, why do the ratings. A manager dealing with an employee who is habitually late can simply document the lateness, and discuss with the employee what needs to be done to remediate the problem. No numbers, and no very rough, subjective categories.

Simply put, ratings, on their own, do not convey sufficient information for people to improve. And since they don't do that, why use them?

Problem Three: Fairness Issues

If, as we suggest, ratings systems are too subjective (but appear objective) and ratings do not help employees get better, there are some serious problems from the position of the employee.

First, since the criteria for ratings are so often loose, most employees are going to resist being classified at the low end of the scale. Employees who are low rated are more likely to resist the subjective evaluation of the boss, argue, claim personal vendettas, etc. Simply put, they are easy to argue with, just because performance compared to vague criteria are unmeasurable. So, the manager says performance is unsatisfactory (1) and the employee believes it is excellent (5). Where do you go from there.

It is far more sensible to eliminate the rating completely, and use critical incident reports or firm, measurable objectives where there is less possibility for interpretation. Which is less likely to cause resistance on the part of an employee? Telling someone you think they rate an unsatisfactory classification for dependability, or providing employees with an attendance sheet that documents that they were late eight times in the month?

Why Is Rating So Popular?

If ratings are not objective, are not needed to promote employee development (and productivity), and create friction and argument in the workplace, why are they so popular?

The answer is simple. Organizations can use a common, "one-size-fits-all" form that can be administered quickly and easily. It doesn't cost as much as an Management by Objectives approach which has potential for providing objectivity and the perception of fairness. It also doesn't provide objectivity and fairness.

It's cheap and it doesn't take a whole lot of time. Or is that really true? In a short-term perspective it IS true. However if a rating system doesn't help people do better, are there costs that are incurred as a result of having such a system? Probably. A poor system is expensive later. In legal issues, grievances, and the cost of performance problems that are not addressed using a rating system.

Final Comments

In a short article we can't complete a fuller picture of all the issues. We invite those interested to order our white paper entitled "Performance Management - Why Doesn't It Work" for a more detailed, but focused discussion. In closing let's consider some of the following regarding performance appraisal.

1. Many organizations report that once a person's salary is no longer tied to doing rating type appraisals, they cease to be done. The reason: Badly implemented systems cost too much in terms of time, money and discomfort on both staff and management sides.

2. 360 Appraisals (rankings from multiple sources) are worse than regular manager-employee rating systems. They create more subjective data, with rankings from one source contradicting ratings from another. Hugely expensive.
 

3. Where ranking systems appear to be succeeding (and the value they add is not usually assessed), they work IN SPITE of the ratings. A good manager can make a rating system work. A poor manager who relies solely on the ranking system is going to do more damage with it than if they did nothing at all. Conflict, bad feelings and argument are going to occur. 

Next month we will be completing this series by addressing the question:

If ranking systems aren't good, and rating systems aren't good, how do we do performance management?
 
 

     

Over the last while our clients have requested that we do more conference speaking and keynotes. One reason is that we provide a different perspective on a number of subjects which has best been describes at pointing out that the "emperor is stark naked". Too many fads, too many abuses of management and training  techniques,  and we are particularly good at highlighting myths in the common wisdom.   
   
If you are looking for something different for your conference or get together, let us know. We promise a dynamic, energizing and thought provoking presentation that will get people's attention, and get people talking.   

We custom design our presentations but here are just a few sample topics:   
  

Why Performance Management Fails (and what to do about it)    
Training Scams That Trainers Play   
Why Most Training is A Bad Investment    
Cooperative Communication = The Core Team Skill    
Defusing Hostile Customers 

Teams & Personal Responsibility    
Dealing With Difficult Parents (for educators)    
How To Make Strategic Planning Work 

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Need A Speaker?Have a comment on this article? Click to send email  
 

Effectiveness & Activity  - Focus On The "E"!

A common charge levelled at government organizations is that they are wasteful and inefficient. I don't think it is completely fair to make such generalized assessments, but there is no question that some organizations ARE in fact wasteful and inefficient. Why is this? Is it because government staff are lazy and overpaid? Is it because they don't care? Are they wilfully wasteful out of cynicism?

The answer to these questions is NO. Where waste occurs, it is usually not the result of laziness, sloppiness, and lack of caring. It is the result of a culture, management and accountability system, and general approach that confuses effectiveness with activity. Traditionally, organizations are judged on how much they do, not on how well they achieve specific purposes or goals.

Simply put activity refers to WHAT one does, and how much one does. Effectiveness refers to WHY one does what one does, and whether it contributes to the overall mission of the organization. For example, an organization charged with increasing the general level of public health might have as its activities, funding of school inoculations, provision of public health education and other preventative activities. The criterion for effectiveness lies in the statement "increasing the general level of public health", while the activities - the means to that end (presumably) are the funding, public education programs, etc.

Does Government Really Focus On Activity?

To get a feel for the issue, one has only to go through annual reports issued by government departments. We recently did some research on this issue, and found that, at least for the reports we looked at, there was almost an exclusive focus on activity. That means that the primary documents used by elected officials and the public to assess the usefulness of government organizations are virtually useless for that purpose. Let's look at an example, one that seems to be rather typical.

In the 1996 annual report for The Organization & Staff Development Branch (a Manitoba Special Operating Agency) there is virtually no mention of whether the provision of services has had any measurable effect, positive or negative in terms of the reason training and development activities are used. What does it report? Let's quote:

The success....is reflected in the achievement of its goals and objectives. This success is measured in part by:

. more seminar choices....
. more consulting projects
. more partnerships with private vendors

In the same document, the mandate is states as follows: "...to provide consulting and training services to support the implementation of the government's human resource policies and priorities".

Further in the "Progress Towards Goals & Objectives" section, the ONLY performance measures relate to a) the number of training and consulting projects, and b) the achievement of internal objectives such as organization structure, contractual arrangements and so on.

ALL of these are activity based, not effectiveness based. What would effectiveness based reporting look like? It would focus not just on the what, but the why, and the outcomes. Here are some example questions that come to mind.

 How did clients benefit, generally and specifically from the training and consulting services?

Did client organizations become more cost-effective, offer better customer service, reduce waste, increase employee satisfaction, reduce performance problems, increase use of effective management tools?

These are relatively simple, common-sense questions, but they remain unanswered. It's easy to point to a single organization, but the reality is that this approach, reporting activity rather than effectiveness, is endemic to the system. A quick glance at a report from an Employee Assistance Organization yields almost the same pattern. The amount of services offered increased, but nowhere is there a discussion of whether this is good or bad, and whether the services offered were actually useful and effective.

The Effects of The Wrong Focus

On a wide system basis, the focus on and reporting of activities rather than effectiveness removes the oversight function. It means that elected officials, and even departmental executives (eg. Deputy and Assistant Deputy Ministers) are not in a position to make reasoned, rational decisions about the allocation of resources. How does one determine whether a budget should be increased or decreased if one doesn't know whether an organization is actually accomplishing anything? Gut feeling? Politics? Who knows whom? Whatever criterion used, it's a crap shoot unless effectiveness is assessed.

But let's look at where you probably live. How does the focus on activity affect you and your 

staff? First, let's assume that for the most part, people want to make a difference. Simply being busy is not as satisfying as it once was. The focus on activity is not an effective way to motivate staff, although for some it does work. But, for an increasing number of staff, the question: "Why are we doing this" is becoming more important. A health professional doesn't just want to be busy, and count the number of educational programs delivered. A health professional wants to know that his or her activities have had a positive effect on peoples' health, even perhaps saved lives. That is something to be proud of. Or, looking at another venue, do you want to work with a personnel officer in a human resources section that gauges success by the number of interviews and resumes scanned, or by things like retention rates, management satisfaction with new employees, or productivity of new employees?

Here's a little exercise for you. Think about the projects and activities you have been involved in over the last two years. How do you know they accomplished something worthwhile? How many were worthwhile, and documented and reported on in terms of effectiveness? How many of these projects would you look back on and say "That didn't really do much except keep us busy"?

How do you feel about that? Does it feel like wheel spinning? Running faster and faster on a treadmill that is taking you nowhere?

Staff often have the same perceptions. Simply put when you divorce activity from purpose and effectiveness, you create an environment where stress and detachment from the work occurs. In extreme cases, individuals and even the organization itself experience depression. People stop caring.

I am sure you can think of other outcomes in terms of wasted resources, human potential and productivity.

What Can You Do?

A good part of the focus on activity is a result of a culture and a system that encourages it. Reporting and focusing on activity seems to protect organizations from scrutiny, so there is pay-off for doing so. Given that you are not able to change the system on your own, are there things you can do locally to help prevent the negative effects of activity based functioning?

Staff members can play an important role in helping an organization consider it's effectiveness. One of the primary ways this can be achieved is to ask the right questions. Don't be content with knowing WHAT you are asked to do, but make every effort to find out WHY you are doing it, and how you are going to know if the activities are effective. Press for ways to evaluate effectiveness. Ask questions of your colleagues and your manager. For example: Why are we doing this? How will we know we have succeeded? How will we measure success? Is this really worth doing?

Sometimes the answer will be that "we were told to do it", and that is a reality of any workplace, public or private. But simply asking the question reinforces the idea that you are paid not to DO a job, but to achieve something as a result of doing a job!

Keep in mind that management works in the same system and can't always see outside of it. Consistent, courteous and insightful questioning can help managers see outside of the "way things have always been done".

Managers and executives can do many of the same things. Ask those same things to those above, and those below in the hierarchy. Ask staff why they think their activities are valuable. Encourage staff to find out how successful their activities are. Ask, and gently push and prod YOUR boss about measures of effectiveness.

Beyond that, ensure that staff are focused on effectiveness, not just activity. Work this into performance appraisals (we prefer the term effectiveness enhancement discussions). Use strategic and operational planning methods to highlight purpose, and results, not activity. This means allowing your effectiveness criterion to drive your activities to the degree that you can do that in a political environment. Include and involve staff in the planning process.

Where possible, consider changing the way you report on your activities. There is nothing wrong with reporting activity levels, but there is something wrong with reporting ONLY activity levels. If you can demonstrate effectiveness, trumpet that loudly and often. Think of doing this as a way of helping resource allocators make sensible decisions that can be to your benefit. What is more convincing?

In the past year we doubled our provision of preventative health activities.

In the past year, as a result of doubling our provision of preventative health activities, the incidence of illness among neo-natals whose parents attended education sessions dropped by 40% with a cost savings to the health care system of $XXXXX.

Which statement is more likely to help people understand your usefulness? Which statement is more likely to build organizational pride, and a sense of meaning for staff?

Final Comment

Our experience is that there is a strong tendency to confuse activity with effectiveness, and it is more a result of the way government systems have worked in the past. If you are a manager, your first step is to examine whether you have been making the distinction between the two. If you haven't been doing so, start. If you have been making the distinction, then work to ensure that your staff understand the difference. Look at your performance management and strategic planning methods to ensure that they become more effectiveness-based than activity based.

As the editor of the Public Sector Manager (for six years) I would like to welcome you to the online version of our publication. We are migrating our newsletter to the 'net, and phasing out our paper publication. While the current title of the newsletter reflects it's roots and origins, you will find that almost all of the content relates to all sectors: public, private, and not-for-profit. In the Spring of '98, we will be renaming the newsletter to reflect these editorial changes.   

The PSM newsletter will be available in two ways. It will be posted on the internet at our web site, or you can subscribe for free and receive it in your mailbox. Subscription is simple. Just send us an email requesting that you be placed on our PSM mailing list. However, to take advantage of this option you will need:   

An Internet browser (like Netscape or MS Explorer)...what you are using to read this now.   

You will also need a program that can unzip "zipped" archives.  

All you will need to do is save the "zip" file we send you via email, unzip it and view the newsletter file with your browser. We will send instructions along with the newsletter.   

This is our first pure internet version. We invite your comments about the readability or formatting, so we can continue to improve it over the next few months. Please e-mail your comments to rbacal@escape.ca.   

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Influencing Your Boss - Getting Heard Help Card 

As a thank you to our paid subscribers, we have included, in this month’s PSM  
Newsletter a copy of our newest help card: “Influencing Your Boss — Getting Heard.  
  
For organizations to benefit from new ideas and suggestions generated by those that work in it, two things need to happen. First, idea originators need to know how to present them to decision makers in ways that increase the likelihood of the ideas being listened to. While some people suggest that ideas are adopted based on “organizational politics” often it is the well presented ideas that prevail; sometimes to the detriment of better solutions.  

Second, decision-makers need to both encourage and foster new ideas, keeping an open mind to others’ suggestions.  
  
It is probably accurate to state that most organizations lose a considerable amount of good effective innovative ideas because decision-makers are not always open to new ideas, or idea originators lack some of the knowledge and skills needed to put them across in compelling ways.  
  
Our new help card entitled “Influencing The Boss — Getting Heard is designed to  
provide suggestions to help people present their ideas to decision-makers in a more  
effective way.  
  
If you are a manager you may find that the tips on the card help you communicate with your boss. Or, purchase copies to give to staff to help them communicate with you.  
  
If you aren’t a manager...well, we all have bosses, don’t we?  

If you have access to the internet you can preview this helpcard by clicking here while you are connected. You can order this help card by clicking here 

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The following outlines our Defusing Hostile Customers Seminar For Government. Similar seminars can be designed for various private sector contexts (call centers, retail, service industries). All seminars are custom designed for clients.

Who Will Benefit From This Seminar

Any government employees (including supervisors or managers) who deal with difficult, angry and volatile clientele in person or on the phone.

Benefits & Outcomes
 

• More complaints & problems can be dealt with without managerial involvement.
• Reduction of time needed to manage or resolve difficult situations by applying non-argumentative techniques to help clientele “hear”
• Increases workplace safety through prevention.
• Increases staff confidence dealing with volatile situations.
• Tactics learned can also be applied to interactions with co-workers.

Special Seminar Features
 

• Built from ground up for government staff and situations.
• All seminars custom-designed and use examples and cases from your workplace
• Uses script analysis techniques to provide practice opportunities - a low stress approach.
• Builds both specific skills and understanding of angry and hostile dynamics, so participants can continue to improve “on the job”.
• Seminar manual serves as both workbook and reference book.
• Cost effective. Per person costs can be as little as $55.00 per person for customized seminars.
• By training all staff in your workplace, allows staff and managers to work together as defusing teams.
• Seminar Options
• Available in one day, two day formats.
• One day seminar can be split into two half-day seminars delivered on consecutive days.

What Do Participants Learn?
 

• How to prevent small conflicts from becoming time-eating, stress-provoking situations
• How to maintain self-control amidst the insults and threats.
• How to time and sequence responses so clients will listen.
• How to counter the physically  intimidating person.
• How to use language to prevent escalation and increase cooperation.
• How to use techniques to get angry or hostile people to listen and stop arguing.
• How to avoid sounding bureaucratic.
• How to set and enforce limits when client behaviour is unacceptable.
• How to terminate conversations properly and effectively
• How to deal with telephone hostility
• How to work with supervisor to deal with situations more quickly.
• How to defuse as a team
• How to provide for “face-saving” outs for clients.
• Role of supervisor/manager
• Transparent time-out tactics
• Dealing with audience situations
• Cultural issues

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