Wednesday, July 29, 2009

Why do many performance appraisal initiatives fail?

The key to company success is people. Performers is what build tomorrow of every organization. The way they spend their working time today directly affects the company's outcome tomorrow. Many companies do not just rely on people themselves to drive personal performance. Not everyone has that nagging second self inside which does not allow staying complacent.

Almost all companies want to drive personal performance. Many companies think that they do. And just a few actually do it. Despite the idea is quite simple, implementation is what makes the difference.

There are almost infinite numbers of ways, in which a good endeavor can fail. Personal performance management is not an exception. Below are recommendations, failure scenarios and things to avoid while establishing a reliable performance management program. I have derived it from my own experience. It comes from the real world cases.

Process tips:
- Do it regularly, but at least once a year.
- Do it consistent throughout the organization.
- Gather information for the appraisal from more than one source (the more, the
- Provide improvement plan within the appraisal.
- Track improvement plan execution.
- Meet in person to discuss the appraisal.

Failure scenarios:
- Lack of initiative on management side. Managers clearly do not understand why they need it. As the main driving force is down, the whole process collapses. In order to avoid, one needs to sell off the idea to managers, so they agree spending time for working on appraisals. Create a plan and demand following it strictly.
- Lack of credibility to what is stated in the appraisal on the side of the employee. In order to eliminate this factor, let employee know how many people participated in providing information for the appraisal.
- Attempting to create a Magic formula. Quantitative metrics (how many lines of code, defects, tests, etc.) are good source of information on performance. But those metrics need additional analysis. How complex a problem solved was? How big was the responsibility and time pressure? What was the quality? - Do not try adding more parameters to cover all those deviations! You’re either find yourself in the middle of near infinite number of scenarios or you will fool yourself with some compromise variant (one of many). Better stick to qualitative parameters (excellent, good, mediocre, bad) to assess the appraised features.

Things to avoid:
- Subjectivity is the killer. Gather information from as many sources as possible.
- Disagreement can severely undermine the efficiency. Make sure all disagreements between you and employee are settled.
- Taking it too lightly can let any good initiative die silently. Keep re-stating how important it is for the company and the goal the process is pursuing.

Following the tips above, having in mind failure scenarios, and avoiding traps will help you define the process that actually works. Good luck!

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