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The Three Failures of Performance Appraisal

There’s something about performance appraisal that isn’t quite right. Even those teams & organisations that feel they do it well enough sense it may not be good enough…

We know there is both merit & value in setting, gauging and talking about performance.

We want to recognise and support performance – it’s a very good thing to do for humans and organisations.

We each want to grow and develop – if we can do that congruously with the organisations purpose and objectives then so much the better.

We want, need and deserve recognition for what we contribute and the efforts we make.

Yet beyond “doing it well” we struggle to put our finger on what it is that isn’t right… So what is wrong?

The Three Failures

I want to suggest that three interconnected failures are at the root of much of the dissatisfaction. These are:

1. A focus on outputs not valuable activities

2. Weak dialogue in supporting performance

3. Artificial complexity in pursuit of efficiency

Let me explain what I mean by these three interconnected failures in a little more detail.

1. A focus on outputs not valuable activities

Firstly, we haven’t created a useful focus on the activities that we value. We think we have but we haven’t. Instead the focus is often very much on the outputs in a narrow sense and not on the activities and contributions in the context of a much broader journey that may lead to those outputs.

Both quantitatively and qualitatively, outputs are to most minds an easy and relevant measure of performance. Perhaps more significantly we believe the coordinated accumulation of outputs across the whole, if directed well, helps us create certainty and causality in organisational performance. This logic says that if all the sales people achieve their sales targets the whole group will meet an expected target or greater. It’s a simple and alluring logic…


If all we want to create is isolated, linear outputs then that simplistic focus could be enough. However, most meaningful outcomes aren’t created with such singular linearity. The activities that we value most have both a complexity and exponential nature.

Take true teamwork as a classic example. We know that with good team function the sum of the parts becomes greater than the whole…

1+2+3+4 starts to become much greater than 10

We also know that without care and support team dysfunction can significantly reduce this potential and even create a value less than 10.

1+2+3+4+dysfunction could be less than 10

The valuable activities that supports the best possible outputs are probably behavioural at heart. It might require greater and better dialogue rather than a course or a team event.  It might require better thinking rather a behavioural objective. It might require something quite creative to meet an output objective.

My sense is that a dominant focus on outputs compromises valuable activities. It’s perhaps not intended but it’s what happens. Ironically, it’s these valuable activities that will create better outputs…

The first failure has been a focus on outputs not valuable activities.

2. Weak dialogue in supporting performance

Secondly, we struggle to support performance in a way that is valued. We all (should) recognise the value of meaningful engagement. The development of leaders and managers is focussed more on the value of real engagement with and understanding of the humans that choose to work with us. When it comes to performance appraisal, it’s the constant dialogue that we want to nurture not the annual awkwardness of a form.

Through better awareness, practice, learning and development we can see managers/leaders having better interactions with their teams. There is still much to be done but undoubtedly we are building a better understanding of what we believe good looks like.

Yet if these interactions are focussed on the outputs and not valuable activities then we still have the wrong focus in these interactions.

If we have weak skill and understanding of how we can better use dialogue with individuals to genuinely support performance then our aspirations aren’t high enough.

If we can’t express what we value and need ourselves then how can we truly support others…

The second failure has been the weak dialogue in supporting performance.

3. Artificial complexity in pursuit of efficiency

Thirdly and perhaps most importantly is what we’ve constructed to “manage” the first two failures.

In light of dissatisfaction and a constant desire for efficiency, we have over simplified our (incorrect) focus on outputs to a few boxes, measures and tools and then created complexity on top to mitigate our oversimplifications. What we get is a distorted view on what we value and how we value it. This just compounds the challenges raised in the other points above.

Let me illustrate thus…

In most organisations, the current systemic way of appraising individuals will probably incorporate a grading system from great to bad. That will probably focus on objectives that were (or were not) agreed upon some time before. On the back of this grading system there will be something related to remuneration and even promotion. The greater your “score”, the better your potential treatment in terms of reward and stature in the organisation. Not everyone will be treated equally. Let’s not forget that this isn’t appraising performance as you would ideally choose to as a leader/manager. This is appraising periodic performance en masse to create uniformity in output. That uniformity makes it easy to manipulate on a spreadsheet – something that any spreadsheet jockey quite likes…

Relative to the performance of the organisation and it’s units (divisions), performance and reward at the aggregate level must align with the overall performance of the organisation. How can you have (and reward) great performance from your people if the organisation as a whole is performing poorly? By the way, this logic helps the spreadsheet jockeys justify the need to collate uniform data…

The culmination of these dynamics, especially when funds are scarce, creates the apparently logical processes of forced rankings and distribution curves. Unarguable in their logic yet often utterly divorced from the sentiment of how we truly want to manage and lead the people who choose to work with us.

We want to take the beautiful complexity of human dialogue and interaction, focus on the outputs previously agreed as objectives, then assign people a grade on a spreadsheet. This spreadsheet then helps determine the recognition, reward and stature of people in our organisations. We expect this process to work well because it’s simple isn’t it.

We want to motivate performance across the whole organisational entity and in most cases reward those who can “make the boat go faster” but sometimes also reward those who happen to be closest to us on the boat. After all, when your boat hits rough waters it’s good to have someone who’s handy with a bucket.

The simplicity of the logic and process is beguiling.

Yet the divisions it creates between “great” and “bad” has questionable value. The potential to directly or indirectly “game the system” increases in ways that don’t support the overarching objectives of the organisation.

The layers of complexity on top of simplification create challenges that we have to unpick or mitigate contrary to what we wanted to create. Ultimately we spend more time dealing with the artificial complexity than talking about how we can efficiently and usefully build performance and potential.

What we aren’t dealing with is the true complexity that lies beneath the oversimplifications…

The third failure has been the artificial complexity that we’ve created in the pursuit of efficiency.

So what do we do about it?

Deep in this challenge lies some fundamental aspects that will need to be unpicked for the context(s) any organisation sits in. I believe the challenges will be as much philosophical, cultural, behavioural as they will be practical. Deepest still lies a challenge of leadership.

It takes a certain kind of leader who will focus on…

…developing valuable, value creating activities and believe so much in the value of those activities that they trust the outputs will be good.

…role modelling and developing stronger dialogue and understanding as a way of leading as a way to better support performance.

…the real complexities that need addressing and seek their own good practice rather than follow the herd.

 So I wonder…

Are you focussed more on the outputs than the value creating activities that create good outputs?

Are you doing anything to develop stronger, deeper dialogue in supporting performance across the organisation?

Are you creating artificial complexity in the pursuit of efficiency? Do you notice the real complexities that need addressing?

Something to think about. Comments welcome.

About David Goddin

Passionate about People, Performance & Potential. Amongst many other things David Goddin is a consultant, coach, facilitator & mentor with extensive experience of transforming business performance and organisational effectiveness as a Senior Executive in large organisations. As the founder and Managing Director of Change Continuum, David now works with companies and business professionals who want to increase performance, accelerate change & unleash potential.


3 thoughts on “The Three Failures of Performance Appraisal

  1. Reblogged this on 101 Half Connected Things and commented:
    Considered and interesting. Point 3 is a great point that doesn’t normally receive enough attention.


    Posted by daviddsouza180 | March 17, 2015, 11:32 PM


  1. Pingback: Outcomes | Peripheries: - March 18, 2015

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