PERFORMANCE APPRAISAL: A CRITICAL DILEMMA IN TEAM-BASED ORGANIZATIONS

by

Walter O. Einstein, Ph.D. & Susanne G. Scott, Ph.D both of University of Massachusetts Dartmouth

PERFORMANCE APPRAISAL: A CRITICAL DILEMMA IN TEAM-BASED ORGANIZATIONS

Walter O. Einstein, University of Massachusetts Dartmouth, weinstein@umassd.edu Susanne G. Scott, University of Massachusetts Dartmouth, sscott@umassd.edu

The pervasive use of teams in today's organizations makes effective employee performance appraisal challenging. W.E. Deming and others argued that individual performance appraisal focuses attention where it should not be in a team-structured organization - on the "I" rather than the "we." Yet, social loafing too often results when people are not held accountable for their individual contribution to their team. Further, many of the prescriptions offered on effective performance appraisal in team-structured organizations fail to consider that different types of teams require different "teaming" behaviors and may require different appraisal methods. In this article, we discuss why individual and team performance appraisal must be used simultaneously to assure high levels of individual motivation. We also explore how performance requirements and appraisal methods may vary depending on the complexity of the task that a team is involved in and team membership dynamics. We conclude that goal-based appraisal systems at the individual and team level provide highly effective motivational and developmental tools when they:(1) actively involve employees, teams, and managers in the development of performance criteria; (2)assure alignment of goals at one level of the organization with goals at the next higher level; (3) and are flexible enough to be used with minor modifications across a wide variety of positions and across different types of teams. Our analysis underscores the fact that the use of team-based structures increases rather than diminishes the critical need for effective leadership in the design and implementation of performance appraisal and reward systems.

INTRODUCTION
Performance appraisal has been used in American industry throughout most of the 20 th century as a tool for evaluating and documenting employee performance against standards as a means of control, and providing constructive feedback to employees in the interest of enhancing their development. Successful organizations devote significant energy and resources to the design and implementation of their employee performance appraisal system as performance appraisal, when used in conjunction with other high performance work practices, leads to increased employee productivity, reduced employee turnover, and improved overall firm performance and market value [1]. Traditionally, employee performance appraisal has been focused on evaluating behaviors leading to individual task attainment. This made perfect sense (and still does) when work was broken down into small constituent parts, delegated out to specific individuals for accomplishment, and one persons task performance was not directly dependent on anothers. However, as tasks in organizations have become increasingly complex and interdependent, organizations have restructured so that teams rather than individuals are now their primary performance unit. In many (if not most) organizations, it is now unacceptable for an employee simply to sit at her work station diligently processing work with little regard to what others are doing around hernow she must be jointly and individually accountable for the processes, the quality, and the quantity of the work produced by her work team [2] The use of teams continues to proliferate on shop floors, among technical professionals and white-collar workers, and in the executive suites of major corporations. There is a growing consensus that effective teams provide a number of benefits to organizations [3]. These include: increased employee motivation through the empowerment of self-managed work teams as members assume tasks previously performed by managers. increased coordination among many departments and closer coupling of functions through cross-functional teams as members bring their different perspectives to bear on organizational problems. increased flexibility in the utilization of human resources through deployment of experts and professionals to project teams. decreased time to market for new products and services. Despite their prevalence and reported benefits, the implementation of team-based organizational structures has not been easy, and the literature offers numerous examples of ineffective teams in organizations [4], [5], [6], [7]. Many organizations have discovered that collaborative work is far more difficult in practice than in theory, particularly in more individualist western societies such as that found in the United States. Despite the pervasiveness of teams, the question of how to adequately appraise performance in team-based organizational structures remains particularly problematic. In this article, we first discuss why both individual appraisal and team appraisal are critical as motivational tools in team-based structures; second, we describe a goal-based method of performance appraisal which is wellsuited for the appraisal of teams and team member performance; and finally, we consider how performance criteria and appraisal methods vary with the complexity of the task that teams are engaged in and with the stability of team membership dynamics. Our underlying premise is straight-forwardgoal-setting, performance feedback, and reward systems can undermine or support team effort. They are seldom neutral in effect, and they require strong organizational leadership if the benefits of teams are to be realized. APPRAISING THE TEAM OR APPRAISING THE TEAM MEMBERS? Who gets appraised and rewardedthe individual members or the teamhas been one of the more contentious issues in team-based organizations. Traditionally, performance appraisal systems were designed to reward behaviors attending individual task attainment to

the exclusion of behaviors that nurture, support, and enhance a team as a performance unit. Largely in reaction to this, no less an authority than W.E. Deming advocated that individual performance appraisal be discontinued completely in total quality management environments [8], [9]. Deming argued that individual performance deficits are typically caused by up-stream system errors and malfunctions rather than by a lack of individual effort or incompetence, making performance appraisal inherently unfair. Further, according to Deming, individual rewards focus attention on self-interest rather than on the pursuit of system goals. Demings focus on process and systems provided a much-needed wake-up call to American industry, but his perspective on performance appraisal largely ignores the fact that people do vary in the amount of effort and capability they apply to their work. The exclusive use of team appraisal systems can be problematic in that they may fail to adequately motivate individual team members. There is ample evidence that social loafing a conscious or non-conscious tendency to shirk by withholding effort toward group goals while sharing in rewardsoccurs more often when group members believe that their individual contribution (or lack thereof) cannot be identified or assessed [10], [11]. Unfortunately, this tendency is even stronger in individualistic societies such as the United States than it is in more collectivist societies such as those found in many Asian countries [12], [13]. While individualism brings with it a high need for personal achievement and reward, it also results in a greater reluctance to embrace teamwork, and greater social loafing when individual contribution is not assessed. Even more problematic, if a team must support a freeloader with no recourse through a formal appraisal system, other team members often withdraw effort [13]. Social loafing can spread among team members like a particularly virulent flu, poisoning the work climate. Motivating everyones effort in team-based organizations relies on the adequate assessment of team contribution to unit and organizational performance and the identification and assessment of individual contribution to team performance.

GOAL-BASED PERFORMANCE APPRAISAL IN TRADITIONAL ORGANIZATIONS Traditionally, performance appraisal criteria have been one of three typestrait-based, behavior-based, or outcome-based [14], and, more recently, competency-based criteria have been used with some success [15]. None of these methods has been without criticism, but behavior-based and outcome-based criteria have been used in combination with some success in team-based structures. Outcomebased performance criteria are an essential aspect of goal-setting programs, which have long been known to nurture employee motivation when implemented correctly [16] [17]. In addition, the assessment of behavioral criteria provides useful feedback to employees on what is required to attain specific goals as well as indicating where training is needed [18]. Many jobs today are multi-faceted and require employees to engage in many different types of activities and behaviors in the performance of their organizational roles [19]. The first step in designing an effective performance appraisal tool must be the identification of the broad dimensions of an employees job. For example, many sales people not only actively sell new accounts or customers, but also complete administrative tasks and support existing customers. Thus, the dimensions of a sales job might include sales, administration, and customer support. Certainly, the formal job description should reflect these dimensions, but the relative priority assigned to each varies across particular sales positions and even across particular job incumbents. The priority assigned to each job dimension reflects local needs in the department and must remain flexible--it is not a question of how much time an incumbent spends on the activity, but how much time (and energy) he or she should spend given current department and organizational needs. We have seen situations where the demands of a job add up to more than 100 %, which is clearly a recipe for failure, burnout and disillusionment on the part of the employee and for frustration and disappointment on the part of his or her supervisor. Identifying and negotiating the weighted dimensions of a job at the

beginning of a performance cycle serves three purposes: it influences employees and supervisors to think deeply about which activities are most supportive of department goals and of the organizational mission it communicates to supervisors which dimensions of jobs employees are most interested in, perhaps influencing future assignments it results in a concrete agreement between employees and supervisors on where time and energy will be focused. Once job dimensions are specified, the next step is identifying criteria or standards of performance within each job dimension. Again, employees should be encouraged to play at active role in the process by working with their supervisor to develop a mutual understanding on what really matters to their performance. This dialogue between employee and supervisor provides a unique opportunity for each to develop a deep understanding of the others perspectives and to come to an agreement of what good performance looks like. The emphasis on each criteria of performance may differ across job dimensions, and can be assigned different weights based on discussion between the supervisor and employee, or between the supervisor and a group of employees in similar capacities. For example, the quantity of work may be the most important consideration in the administrative dimension of a salespersons job, while oral communication skills may have much greater relevance in sales and in customer support. Figure 1, on the next page, provides data on a simplified example of a production employee in a welding department of a manufacturing facility. At some time in the past, the department manager reviewed the published job description with all members of the welding department, and solicited their ideas regarding the dimensions of their jobs and the criteria of performance for each dimension. Following a number of meetings and discussions, the welders and the supervisor agreed that their jobs could be thoroughly defined by just two dimensions that they jointly labeled Production and Process Improvement. In the same meetings, they also agreed on the weights to be

assigned to each dimension, the criteria of performance for each dimension, and the weights for each criterion. In Figure 1, the criteria found relevant to this job are shaded, and the appropriate weights are shown. Since all production workers in this particular department perform within the same job category, they are all held to the same performance criterion. In this example, a production worker rated herself on each performance factor using a 5point Likert scale. Her supervisor rated her independently. The two of them then discussed discrepancies in their observations and tried to reconcile them. Ultimately, the supervisors observations were used for the formal appraisal, but both ratings were maintained in the employees records. The overall performance rating (400 in the example) is used to determine the employees compensation. Numerical standards of performance are set using a statistical distribution as a guide, and the score is also used to compare and rank employees within the same job classification and department. More importantly, although the employee is rated as a good production worker, the appraisal indicates that she has not been able to do as well in the process improvement part of her job. Since her ability to take independent action, her communications, and her judgment are all rated below average, her supervisor suggests that she may benefit from additional training in critical thinking, communication, and leadership. Together, they consider a developmental plan that includes 20 hours of training for her in these areas during the next performance cycle. Alternatively, a supervisor and a employee may, on discussion and reflection, jointly decide that further training is not warranted. Perhaps, it becomes apparent when comparing her performance with other workers, that the employee outperforms most of them in production, and the supervisor agrees with her that her time is best spent 100 % on that dimension of her job. Or perhaps the employee does not wish to engage in continued training these are tradeoffs that we believe need to be left at the level of the direct supervisor and the employee. While the ideal may be to have each and every employee be multi-talented, highly

FIGURE 1 EXAMPLE PERFORMANCE RATING FOR A PRODUCTION WORKER

Dimension (a) Production Dimension Weight (80 %) Criteria Weight Rating (1-5) Weighted Rating Dimension (b) Process Improvement Dimension Weight (20%) Criteria (%x 100) Quality of work Quantity of Work Attendance Independent Action Resource Use Relationship Skills Leadership Communications Stress Tolerance Judgment Total 30 30 10 10 10 10 5 5 5 4 4 2 150 150 50 40 40 20 20 30 100 450 80 % 360 + 2 2 40 60 : 200 20 % 40 = 400 20 2 40 Rating (1-5) Weighte

Performance Rating for a Production Worker

30

60

100 Dimension Raw Score Weight of Dimension Weighted Dimension Ratings

motivated to self-actualize, and cross-trained to perform many different job functions, the reality is that many good employees do not fully meet this objective. In traditional hierarchical organizations, when good employees indicate that they do not wish to be cross-trained, a supervisor can: (1) explain in a straightforward manner that crosstrained employees have higher levels of compensation; (2) explain why this is so; (3) encourage the employee to cross-train; but (4) ultimately, respect an employees decision in this arena.

GOAL-BASED PERFORMANCEAPPRAISAL IN TEAM-BASED ORGANIZATIONS

The previously described appraisal system helps develop and reward strong individual contributors. But, within team-based organizations, the goals of individual contributors must be more clearly aligned with the broader goals of the team. A singular focus on individual accomplishment can be counterproductive in a work environment where information needs to be openly shared, tasks are highly interdependent, and members need to collaborate to accomplish the work. In teambased organizations, employees must recognize that team performance is linked to their contributions to the teams processes as well as to the teams task, and individual development becomes a job requirement.

Teams, like individuals, need to be formally appraised by management if they are truly to be recognized as the performance units of an organization. However, as performance units, we believe that they should not be evaluated on teamwork or on internal dynamics but on the extent to which they achieve their goals. While competency or behavior-based goals can be very effective in identifying developmental needs, their exclusive use tends to focus attention on teamwork for teamworks sake rather than on teams as performance units [20]. The team and the manager should jointly prepare a contract that identifies the team goals, and the team should commit as a group to achieving the goals. Team goals should be specific and, wherever possible, include quantifiable output measures, but they can also include other types of measures. For example, the goals of a self-managing production team might include meeting a certain productivity level, but could also include providing for a minimum number of hours of training for their members within the performance cycle, or minimizing the use of temporary help by scheduling people more effectively. The goal of a new product development team will certainly be to develop a product that will outperform competitors in the marketplace, but is also likely to include bringing the project in on time and within budget. Managers are responsible for appraising the teams performance against these goals. Cianni and Wnuck suggest that teams, rather than managers, should be responsible for appraising the individual performance of their members, for initiating and implementing the training and development of members, and for the monitoring of progress toward team goals [20]. They also offer numerous examples of companies in which this system works. However, we need to recognize that these prescriptions, while lofty in the abstract, can be considerably messier in application for a number of reasons. First, while intact, self-contained work teams can be equipped through training to assess member performance relevant to the task at hand, they are less likely to have a broad enough view of the organization to manage individual training and development in preparation for future assignment. Second, managers must be actively involved in the

performance appraisal of teams and their members to assure that goals are aligned at each level of the organization, and to manage the legal requirements inherent in performance appraisal. This becomes particularly important when performance criteria go beyond the job to extra-role behaviors such as citizenship, innovation, and team work [19]. Further, there is significant evidence, that even in team-based organizations the supervisor/employee relationship is critical to employee motivation [22]. The direct supervisor provides a face and voice to the abstract organization, and employees expect them to speak for it [23]. Ultimately, supervisors and managers must assume a leadership role and cannot abdicate responsibility for the appraisal, motivation, and development of employees in team-based organizations. Finally, even if intact work teams engaged in on-going, routine tasks can be trained to adequately appraise performance in a manner that meets legal requirements, membership dynamics in other types of organizational teams largely prevent this.

DIFFERENT TYPES OF TEAMS AND DIFFERENT TYPES OF TEAM WORK

There is an unfortunate tendency to make sweeping generalizations about performance appraisal in team-based organizations without considering the different types of teams on which employees work. For example, the oftenrepeated admonition that team members should be jointly accountable for attaining the teams goal fails to consider constraints caused by team structure and mission that limit some members ability to influence team outcomes. Further, teams need different types of individual contributions given their different tasks and structures. Teams in organizations vary in many ways, but there are two broad dimensions that are particularly relevant to performance appraisal issuesmembership dynamics and task type. Membership dynamics refers to the expected tenure of a team, to its stability of membership, and to the allocation of team member work time [24], [25]. Task type recognizes that organizational teams engage in a wide variety of work that varies considerably in terms of how routine tasks are. Some teams work on routine tasks that are relatively well scripted and defined

with minimal exceptions to the rule encountered

and where corrective action for exceptions is fairly easily specified. Other teams work on nonroutine tasks, which tend to be emergentthe desired outcome and/or the means to task accomplishment are difficult or impossible to define in advanceand complexthe task requires the application of multiple knowledge

bases learned through education in a specific discipline or through extensive training. While membership dynamics and task type can vary independently of the other, there are patterns among them in the characteristics of teams typically used in organizations (Figure 2).

Figure 2 Characteristics of Teams used in Team-Based Organizations (Membership Dynamics)

Stable, Long Tenured, Dedicated Top Management Teams Non-Routine Research & Development Teams Product Development Teams Fluid, Short Tenured, Part-time

(Task Type)

Forest Fighting Teams

Continuous Improvement Teams Service Work Teams Routine Ad-hoc Committees

On-going, intact manufacturing or service work teams have long expected tenure, relatively constant membership, and team members who spend most of their 40 hour work week engaged in the teams task. In these stable, long-standing teams, members share a history that extends over multiple performance appraisal cycles (perhaps even years), they have expectations of a future, and they interact

elbow to elbow throughout a workday. Members have similar skills and are crosstrained to perform any task needed for team goal accomplishment. This is simplified to a large degree by the routine nature of the tasks that these teams are involved in. They receive performance feedback through iterative cycles of task completion, providing them with great

potential for team learning, team self-correction, and team development. We think of work teams as prototypes of the ideal team. But most other types of teams in organizations do not look like the ideal team; they have greater variability in membership dynamics and less routine tasks. For example, standing teams such as safety committees or process improvement teams in a factory may have long tenure, but membership tends to change at predetermined times, and a much smaller percentage of members' work time is allocated to their teams work. Thus, membership dynamics are more variable than those of stable work teams, and the task tends to be somewhat less routine than that of work teams. The wide varieties of project teams used throughout organizations are even more divergent in character from ideal teams. They are assembled to confront a specific organizational problem, and their tenure is tied to task accomplishment; It can be very short or relatively long. Membership may be stable on some project teams but very fluid and changeable on others. Time allocation can vary among team members from very low to 100 %. Among project teams, membership dynamics range from somewhat to highly fluid depending on the type of task in which they are involved as well as the scope of the project. Tasks can range from somewhat routine to highly nonroutine. Those engaged in more routine tasks are really ad hoc committees that usually have short tenure and non-dedicated, but stable, membership. As tasks become even less routine, project teams have longer tenure (assuming the project has sufficient scope), and a core group of members are fully dedicated to the team, but technical specialists and support people still come and go as they are needed. Members vary considerably in terms of their functional knowledge and technical specialties. Of particular consequence, the relative contribution to the teams goals varies considerably across members. Because the nature of the work is emergent rather than scripted, the team must spend time defining steps needed for task completion and preferred outcomes drawing on the disparate expertise of various team

members to do so. Because the membership is fluid and the task is non-scripted, they do not engage in iterative cycles of work completion, and they receive less direct task feedback. Learning is more likely to be individual rather than team learning per se, and it is transferred to other projects as individuals move from team to team. Such learning benefits future teams more than the current team, and, over time, employees who transfer skills adequately become project leaders and managers themselves responsible for the leadership functions on the team.

EFFECTIVE PERFORMANCE APPRAISAL OF TEAM MEMBERS

In considering performance appraisal of team members, two issues must be addressed: (1) what criteria and method should be used to appraise each team members individual contribution to the team; and (2) the extent to which a team member can justly be held accountable for the teams goal attainment. Very different teaming behaviors are required for different teams, and these differences should be reflected in the performance appraisal system. Much prior work on individual teaming competencies tends to focus on those needed in ideal teams, that is, in self-managing production or service work teams. In Table 1, on the next page, we offer a list of performance competencies needed by team members in self-managing work teams based on our experience as well as prior literature [2], [26], [27]. These competencies relate to the building of productive work-relationships among team members, contributions to greater harmony within the team, and the assumption by members of leadership responsibilities including goal setting, planning, and team improvement. Because all members participate 100 % in team task accomplishment, and their contributions are assumed to be equal, every member of the team is assessed using the same criteria. There is nothing magical about the ten criteria that we present--we strongly recommend that teams and their managers review this list as a starting point only.

TABLE 1
TEAMING COMPETENCIES FOR MEMBERS OF SELF-MANAGING WORK TEAMS
1. Competence: Team members are chosen on the basis of their competence to contribute to the achievement of the teams objectives, and they should be assessed on the extent to which they bring that competence to bear to meet the particular set of technical, business, or other challenges the team faces. 2. Leadership: In self-managing teams, team members share this responsibility, and all members should be assessed on their ability to act in the role of a coach or facilitator, to remove roadblocks for the team, to use their planning and organizing ability, and to establish or promote team norms. 3. Goal Focus: Team members have to be results-driven and must be able to stay focused on the task at hand despite distractions. They should be assessed on their ability to avoid become mired in minor details or personal skirmishes, and the extent to which they encourage each other to stay focused on the team goal. 4. Reliability: Successful problem resolution relies on a foundation of trust that is built through honesty, openness, consistency, and respect. Team members do not need to like each other or be friends, but they need to be able to have confidence in each others work. 5. Commitment to Teamwork: Team members must understand, accept, and implement team decisions and individual assignments. They should be willing to make sacrifices for the success of the team, and they should demonstrate interest and involvement. 6. Communication Skills: Team members need good listening skills, and they also must be able to verbalize their ideas convincingly to others, to prepare accurate team reports, and to use appropriate business language. 7. Collaboration: Teams need free and open information sharing. Team members must be willing to express their ideas and the logic behind them, to listen to the ideas of others, and to work in good faith toward a synthesis of all team members ideas. 8. Relationship Skills: Teams where interpersonal conflict is rampant seldom achieve their ends. Team members need to be supportive of each other, to use tact and show respect to others, to provide feedback that is behavioral and relevant to task accomplishment, and to keep conflict focused on the task rather than on the person. 9. Commitment to Learning and Improving: Team members should support the development of their own competence as well as that of other members proactively searching for and welcome additional training opportunities to improve team performance. In self-managing work teams, established members must be mentors and journeymen to new members. 10. Goal Setting and Performance Management: Team members must understand how to set realistic individual and team goals that challenge but do not frustrate. They must develop appropriate metrics to monitor team performance, and they must be willing to hold each other accountable through peer evaluation for obtaining desired results.

They should include those they believe are relevant to their particular team and negotiate weights assigned to each criterion.

While some of the teaming competencies recommended for self-managing work teams also apply to project teams engaged in nonroutine work, many are not relevant and

additional competencies may need to be added. For example, project teams engaged in product development must focus externally as well as internally by seeking political support for their project, coordinating with other areas of the organization as well as with external suppliers, and scanning competitors and external technical resources. Political skills thus become important to the team [28] [29]. There is also likely to be a greater need in these teams for creative problem-solving skills, greater knowledge of group decision-making techniques in general, and a stronger need to be adept at using inquiry and dialogue in communications [6] [7], but less emphasis on team self-management skills [30]. Although the membership is often comprised of highly educated specialists, ironically team selfmanagement is often less appropriate than it is in production work teams. In general, the less variable membership dynamics and the more routine the task, the more possible and desirable it becomes to move management functions into the team, and to make members jointly responsible for team goal attainment. As team membership dynamics become more fluid and the task becomes more complex, strong leadership becomes more critical to goal accomplishment [3]. In addition to differences in the criteria of performance, the performance appraisal methods must be modified to reflect the different membership dynamics in work teams and project teams. For work teams, it is critical that teams and managers share in the responsibility for the performance appraisal process. Team members should prepare a contract among themselves regarding individual contributions required of each member. All members should assess other members on the same weighted performance criteria, and managers should use this information as a tool to determine an employees overall performance rating. Teams use the performance assessment data to work with their members to design individual development plans and to determine training needs (which may be either individual or team training or a combination of both). Finally, to determine compensation, each members

average peer rating is adjusted to reflect the teams goal attainment. In these teams, members truly are jointly and individually accountable for team goal attainment. Figure 3 shows the performance appraisal of the hypothetical production employee we looked at earlier, but she is now assigned full-time to a self-managing work team. As shown, the individuals job collapses into one job dimension, teamwork, with a total of 10 equally weighted performance criteria. The performance criteria that the team and manager have agreed are relevant to this team are shaded in the example. The total raw assessment for the teamwork dimension in this case is 460. However, during this performance cycle, the team only achieved at a rate of 86 % of goal. The individual assessment of 460 is adjusted to reflect the teams accomplishment toward goal, yielding a final rating of 395.6 for this employee. In teams that have more fluid membership dynamics, the performance appraisal process needs to be modified. Because of different membership roles, the weights assigned to teamwork dimensions of a job will vary across members. Because of the different levels of team involvement, members cannot be held equally accountable for team goal attainment. The longer team tenure, the more stable the membership, and the more dedicated the members are to the group, the more project teams come to resemble work teams, and the more similar should the performance appraisal be to that described above, at least for core members. Yet, even in these longer tenured teams, support personnel and technical personnel will come and go as needed and present a challenge to the appraisal system. Some have argued that project teams are, in fact, not teams at all, but just a loose collection of individual contributors, and that support personnel and technical personnel just be appraised on their individual work rather than as team members. We strongly oppose this suggestion. If you want people to put the needs of a focal team before their own and before (or

FIGURE 3 EXAMPLE PERFORMANCE RATING FOR A MEMBER OF A SELF-MANAGING PRODUCTION TEAM

Performance Rating for a Production Worker Criteria Weight Dimension (a) Teamwork Competencies Average of Peer Rati ngs (1-5) Weighted Rating

Competence Leadership Goal Focus Reliability Commitment Communication Collaboration Relationship Skills Learning/Improvement Goal Setting Performance Management Political Skills Decision-Making Independence Dialogue Skills Total Available

10 5 10 4 10 5 10 5 10 5 10 5 10 5 10 5 10 4 10 4 10 4 0 0 0 0 100 Total Weight of Dimension Weighted Dimension Ratings Team Performance Against Goals Overall Performance Rating

50 40 50 50 50 50 50 50 40 40 40

460 100 % 460 86.0 % 395.6

at least on par with) the needs of competing teams, you must specify what team contribution is needed and then hold people accountable for it. As importantly, you must hold them accountable for the teams outcomes but only to the extent that they were able to contribute given their role and the membership dynamics of the team. For example, support people such as technicians, statisticians, or clerical people, whose services are usually requisitioned by a project manager from a central support staff, should also be evaluated on their contribution to project teams they work on. The functional manager and support employees should come

to a joint agreement on what their contributions to project teams should be. Functional managers should be responsible for seeking an evaluation of an employee from project leaders he or she worked for against the agreed upon criteria of performance. This could be done whenever a support persons time allocation to a team reached a certain threshold level within the performance cyclesay 200 hours for annual cycles (or whatever the organization decided was appropriate). To avoid making the process overly cumbersome and inefficient, the number of project leader appraisals sought annually on any given support person should be limited. The idea is to receive a representative amount of feedback to encourage and motivate support

staff to focus on teamwork as an important dimension of their job feedback without over-

burdening the system.

FIGURE 4 EXAMPLE PERFORMANCE APPRAISAL OF A PROJECT ENGINEER

Factor Individual Performance Criteria Dimension (a) Developmen t Engineering (Wt * Rating) 10 * 5 = 50 40 * 5 = 200 Dimension (b) Team Work Competencies Competence Leadership Goal Focus 10 * 4 = 40 Reliability Commitment Communication Collaboration 10 X 3 = 30 10 * 5 = 50 20 * 4 = 80 Relship Skills Learn/Improve Goal Setting Performance Mgt Political Skills Decision-Making Independence Dialogue Skills Dimension Raw Score Dimension Weight Weighted Dimension Score 450 .20 90 + 50 50 50 50 50 50 50 50 50 50 40 40 30 50 50 47 47 43.3 50 50 Project 1 Rating 50 Project 2 Rating 50 Project 3 Rating 50 Average of Project Appraisals

Quantity of Work Quality of Work Attendance Indep. Action Resource Use Relship Skills Leadership Communicatio n Stress Tolerance Judgment

50

40 50 50 50

40 50 50 50

40 40 40 50

40 46.7 46.7 50 470.7 .80 376.6 = 466.6 .90 419.9

Average Team Performance Against Goals Overall Performance Rating

Figure 4 shows a hypothetical performance appraisal rating form for an engineer who worked on a number of different projects during the performance appraisal cycle. The shaded

area represents the performance criteria that the engineer and the functional manager have agreed are critical in the product development

engineering function and as a project team member. Another example occurs with technical people whose expertise is in scarce supply in an organization. They often serve on more than one team simultaneously, and their time may be allocated to as many as 10 to 20 projects a year or in any one performance appraisal cycle. Nevertheless, their contribution to these projects, though limited in time, is likely to be critical due to their particular technical expertise. The issue here is not to obtain a rating of employee technical competence (which is best done by the functional manager), but on their ability to communicate technical information in a manner that is useful to other members who are not specialists. Again, we recommend that the functional manager seek out a number of project leader appraisals. To simplify the example, we have excluded columns of weights and ratings assigned to different performance criterion, but include the multiplicative term and the result in column 2. The project leaders of the different projects the engineer worked on provided the assessment of the teamwork criteria, and the average rating of the three projects was used for the overall assessment of each performance criterion. The functional manager provided the ratings of the criteria for the product development dimension, which comprises 20 % of this engineers job. The weighted ratings for the two dimensions of the engineers jobproduct development (in this example, 90) and teamwork (in this example, 376.6)are then summed to give an individual overall rating of 466.6. Finally, the overall rating is weighted by the average of the three project teams performance ratings against their goal (i.e., 90 %). Thus, for the engineer, his performance ratings consider his contribution to his functional department, his contribution to three of the projects he has worked on, and the average performance of the project teams against their goals. His final rating, on which his compensation is determined, is 419.9. In summary, it is difficult to say exactly when part-time members of a team contribute enough to be held jointly and individually accountable for the teams work. Despite the difficulty, organizations need to seriously consider the question, and when enough is reached, they

need to include the teams performance against goal and the individuals teamwork contribution into the determination of rewards.

THE UP-SHOT? LEADERSHIP IS CRITICAL TO EFFECTIVE PERFORMANCE APPRAISAL

An effective performance appraisal system in a team-based organization should include a resultsorientation and a concern with the processes that enable results. One way to accomplish this is to use a goal-based system that holds the team accountable for results and individuals accountable for their contribution to the team. At each organizational level, it is vitally important that the performing unit, whether individual or team, be actively involved with the next higher level in the joint determination of appropriate goals and criteria of performance. The locus of performance appraisal should remain at the local level between the manager and the teams and between the teams and their members. This provides flexibility in tailoring individual performance appraisal to accommodate the many different types of work arrangements found in organizations todayindividual contributors, part-time team members, or core team membersand the different types of contributions required for different types of tasks. Local management also facilitates the design of individual and team development plans, as well as providing quicker response time when change is needed. Finally, we emphasize that the responsibility for effective performance appraisal ultimately

rests with management. While this responsibility can be shared with employees and with teams, it is managers who must assure that goals are aligned from the organizational level down to the level of individual contributors and that employees and teams understand and commit to these goals. Team-based structures have increased rather than diminished the critical need for effective leadership in this arena.

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