Appraising Performance:

Strategies and Lessons Learned

Wendy K. Soo Hoo, Assistant City Auditor
City of Seattle
November 2004
2
Agenda
What the Experts Say About Performance
Appraisals
What Do You Think?
Performance Appraisals Versus Performance
Management and Other New Practices
Conducting Effective Meetings About
Performance (and Other Difficult Conversations)
3
What the Experts Say About
Performance Appraisals
4
Performance Appraisal Definition
A PERFORMANCE APPRAISAL IS:
One of those special human encounters
where the manager gets no sleep the night
before, and the employee gets no sleep the
night after.
Thomas B. Wilson
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Overarching Goal
To create and promote a workforce that can
achieve the organizations mission to
provide the most value to its stakeholders
6
Elements of Traditional Appraisals
Goal SettingSupervisors set performance
objectives or standards for individual employees;
MeasuresTasks or levels of performance are used
to gauge whether person has achieved his/her goals;
FeedbackComparison of performance to goals is
usually provided at end of performance period;
Performance RatingSupervisor judges overall
performance and gives numeric rating;
Merit PayPay increase based on performance
rating and market price for position.
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Performance Appraisals in Your
Organization

Are managers in your organization required
to conduct performance appraisals?
1 = Yes 2 = No

Do you give performance appraisals, do you
receive a performance appraisal, or both?
1 = Give Appraisal 2 = Receive 3 = Both


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Appraisal Process Objectives
Managers: Recognize and reward top performers.
Employees: Obtain honest, timely feedback,
development and coaching.
Compensation Managers: Ensure that dollars
allocated according to performance.
Human Resource Executives: Identify top
performers and plan for their development and
succession.
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Whats Wrong With This Picture?
Managers are usually uncomfortable with
appraisal process.

Employees are not happy with the assessment
of their performance.

Most organizations (90%) do not consider
performance appraisals to be effective.

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Appraisal process can
effectively serve several
functions
One-size-fits-all works
well for supervisors and
employees
Ratings are motivating


People withhold effort
without incentives
Often one function
undercuts the other (e.g.,
employees focus on pay)

Different preferences in
coaching, receiving
feedback
Ratings dont provide
useful information and can
be demoralizing
People are intrinsically
motivated to perform well
when work is meaningful
Myths Reality
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Why Appraisal Processes Often Fail
Appraisal process only operates for part of the year
not meaningful if goals are not monitored.
Ratings are based on managers opinions, only
include what managers remember.
Managers avoid honest feedback to prevent conflict.
Organizations try to meet too many objectives
(feedback, development, pay raises, etc.).
Employees believe criteria are vague, subjective; can
be demoralized by ratings, especially when pay is
involved


12
Linking Pay to Appraisals
A Good Idea?
At least two dozen studies over the last
three decades conclusively documented
that people who expect a reward for
completing a task, or for doing that task
successfully, simply do not perform as well
as those who expect no reward at all.
Harry Levinson
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Rewards or Punishment?
Pay is not a motivator, but it can be a de-
motivator when it is inequitable
Rewards can create conflict between
managers and staff, or among staff members
Rewards undermine interest because
artificial incentive cannot match intrinsic
motivation
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Merit Pay Increases and
Performance Appraisals
Should merit pay increases be included in the
performance appraisal process?
If the purpose is to provide feedback, encourage
development, probably not.
If the purpose is to reward the individualmaybe.
Merit pay increase should be given when
individual shows new capabilities over a sustained
period, rather than end-of-the-year appraisal.
15
Remember Myers-Briggs
Anyone who supervises someone else should:
Look carefully at the assumptions made about
motivation.
Assess the degree to which carrot-and-stick
assumptions influence own attitudes.
Harry Levinson
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What Do You Think?
On a scale of 1 to 5, what do you think of the
performance appraisal process?
1 = Performance appraisals always meet these
objectives.
2 = They meet some of these objectives.
3 = They are a necessary evil.
4 = They could/should be improved if we continue
to use them.
5 = Performance appraisals should be eliminated
altogether.


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What Do You Think?
Do appraisals encourage you to work harder?
1 = Yes, I work harder because of the appraisals.
2 = Yes at least for the the month before
or after my appraisal.
3 = No, my effort would have been the same with
or without an appraisal.
4 = No, I find performance appraisals
discouraging and ineffective, which impacts
my work effort.
So What Do We Do Instead?

Performance Management and
Other New Practices
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Typical Process Ideal Process
Highly subjective
Unilateral (only from
the managers
perspective)
Little focus on future
capacity
Uncertain link to
business success
drivers
Explicitly defined
Mutually understood,
with multilateral
communication
Strong development
focus
Grounded in business
success drivers
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SMART
SpecificGoals and criteria should be clearly defined;
MeaningfulEvaluation process should impact
behavior;
AchievableGoals should be realistic; process should
provide incentive to perform beyond expectations;
ReliableProcess should achieve desired objectives;
TimelyPerformance reviews and feedback should
occur more frequently than once each year.
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Performance Management

Performance management is the process of
creating a work environment in which
people are enabled to perform to best of
their abilities.
Begins when a job is defined and ends when
the employee leaves your organization.



22
Performance Management
at the Organization Level
Clearly define and communicate the
organizations mission, strategies, and
performance goals.
Provide appropriate training for managers on
giving feedback.
Ensure employees receive ongoing feedback and
appropriate training.
Align job descriptions with organizational goals.
Conduct exit interviews to understand why valued
employees leave the organization.
23
Performance Management
at the Manager Level
Involve employees in goal-setting process; goals
should be flexible enough to reflect changing
workplace conditions.
Clearly articulate performance metrics used to
measure employees success in meeting agreed-
upon goals.
Provide training to employees to strengthen
performance and advance career.
Provide ongoing on the job feedback.

24
Performance Management
at the Employee Level
Develop performance goals with his/her manager.
View manager as a coach or mentor rather than
someone who passes judgment.
Be receptive to feedback.
Dont rely on manager to provide all the
feedbackemployee is also responsible for
providing information on his/her performance.


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Other New Approaches
Evaluations in new systems are not
conducted for raises, promotions, or
bonusesinstead for development and
communication.
Most important aspect in all is multilateral
communication between employee,
managers, and others, rather than one-way
communication.
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Examples
Pass/fail systems or no ratings at all
Peer reviews
Self-reviews
Upward assessments
360-degree feedback
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Owning the Solution
If people do not participate in and own the
solution to the problems or agree to the
decision, implementation will be
halfhearted at best, probably misunderstood,
and more likely than not fail.

Michael Doyle in forward to Kaner, Sam Facilitators
Guide to Participatory Decision Making New Society
Publishers, Gabriola Island, BC 1996
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Recapping the Key Points
Expectations should be linked to business
objectives;
Performance goals should be established;
People should be coached, mentored
employees should be motivated; and
Assessments relying solely on supervisors
perspective will have limited value.

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Are You Using Any New
Techniques?
1 = Yes, and its more effective than the traditional
appraisal process.
2 = Yes, were still evaluating the effectiveness.
3 = Not yet, but were thinking about it
4 = No, well probably always use the traditional
appraisal process.
Dealing With Difficult
Conversations
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Four Stages of Difficult
Conversations
1) Prepare
2) Initiate conversation
3) Explore their story, then yours
4) Collaborate on resolution
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Stage 1: Prepare
Consider your objectives and approach
Conduct researchif youre the manager, review
the employees file, outline some topics and
talking points, do a mental walk-through.
Employee should consider their performance as
well and prepare notes or jot down concerns and
questions.
Be open to multiple perspectives
Adopt a positive mindset (see next slide)

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Choose a Positive Context
When a conflict is framed in a negative
context, the focus is on power, and will
likely result in a winner and a loser.
Focusing on improvements instead of
mistakes can defuse the tension.
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Stage 2: Initiate Conversation
Invite conversation and share your purpose
Key practice: describe the issue/problem as
a difference in perspective
Avoid problem solving during initial stage
of conversation
Acknowledge feelings, which are frequently
core issues, before attempting to solve
stated problems
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Stage 3: Get Their Story--
Then Tell Them Yours
Start with their story
Dont assume that you know their story
Dont push backListening does not imply
agreement
Express your views and feelings after their
story is finished
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Your Story
Start with the most important points
State what you mean clearly to avoid
assumptions
Share how you formed conclusions
Avoid words like never or always or
fault
Present your story as your truth not the
truth
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Stage 4: Collaborate on
Resolution
Invite the other person to help identify solutions
Invite the other person to come back if attempted
resolution is not successful
Remain hopeful that mutually acceptable solution
is possible
Recap major points, be sure to end on encouraging
note

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Key Sources
Wilson, Thomas B. Innovative Reward
Systems For the Changing Workplace,
McGraw-Hill, New York 1994.
Flannery, Thomas P., et. al., People,
Performance, and Pay, The Free Press, New
York 1996.
Various articles published on human
resource websites