We have dismissed the rating and ranking of human performance at a high rate of precision as a virtual impossibility. When there are ‘stars’ involved (e.g. Michael Jordan) or clearly deficient performers, it is clear and no system is needed.
But most people in most organizations are not special in that sense and it may be difficult to distinguish among them in a meaningful way.
It may seem therefore, that no system of performance appraisal is needed, but that is not the case. Some method of feedback is needed for the purpose of improvement and for the eventual screening of those who cannot or will not perform the functions required for a given job. Since numeric rating and ranking is ‘out’, what is ‘in’?
The answer to that question is only limited by the imagination and that is why there is not any one ‘answer’ to the question about the replacement of rating and ranking. Some may answer this question with a ‘you figure it out’ dismissal, but that is not helpful. But, and let me stress this again, there is no one ‘right’ way to do this.
I will present a case study of a program that I was instrumental in designing and implementing that was put into effect at a real company. After a trial period, some modifications were made the system was adopted company wide. I can report that virtually to a person the new system was preferred. No one wanted to return to the old method. Everyone, bosses and subordinates alike, knew that it was seriously flawed although they probably would be hard put to say exactly why.
The new system was called a Performance Planning System. Its purpose was improvement. It therefore melded nicely with the overall company philosophy of continuous improvement and felt to employees at all levels as though it was ‘â€¦all part of the same thing.’
It is difficult to overestimate the importance of this. In the course of my consulting I have visited literally hundreds of different organizations and on countless occasions have run across some lofty statement that is the organization’s ‘people policy’. Many contain the words, â€œ…we consider people to be our most important resourceâ€¦.â€ At the same time these words appear on company bulletin boards, newsletters and annual reports, people are treated as a commodity.
A recent example of this was an executive who advocated the ranking of people as to high and low performance (which we have shown cannot be meaningfully done) and advocated firing the ‘bottom’ ten percent because they were ‘low performers’. It wouldn’t surprise me if the same executive would then give a speech to employees on the importance of loyalty to the company.
Doesn’t the man realize that he still has a bottom ten percent? Are those who were once ok performers, now low performers? What’s a person to do in the face of such foolishness? Hide.
And that is what most people in most corporations spend much of their time doing; hiding from the idiots who are their bosses. He brings to mind the company executive who raised all the urinals in the men’s’ rooms because he wanted to “¦.keep everyone on their toes.â€
The Performance Planning Process (PPP) was designed to treat each employee as a unique contributor. It may seem obvious, but can stand re-statement. Even with the same assignment (job description) no two people come to the job the same way. The bosses job whether he or she is a shop floor supervisor or a CEO is to treat each of the folks that report to him/her as the unique individual that he or she is.
A part of the PPP was an assessment of the performance of the individual in the job in that past year. Not only did Deming not object to this assessment, he advocated it. From Out of the Crisis:
“Hold a long interview with every employee, three or four hours, at least once a year, not for criticism, but help and better understanding on the part of everybody.”
During that discussion improvement is discussed. A part of the improvement discussion will be based on an assessment of performance; what went well and what did not. Some plan will be generated that addresses the issues that arise.
The plan may be some remedial action or may be some training or education of the employee. The purpose is improvement of the system in which the employee works. That is managements’ job. Employees work in the system, managers work on the system. Everyone’s job is improvement.
The PPP at the company with which I worked, required some work prior to their discussion by both the employee and the supervisor (again, this took place at all levels -everyone used the same system). Each was required to write out an assessment of what they felt had gone well in the past year and what could use improvement in the months ahead. Each was required to make suggestions as to the form that improvement might take.
Not only did this provide a starting point for discussion, but also was a check for the supervisor to see to what extent the two assessments agreed. If there was substantial disagreement, not only was there discussion needed during the session, but also the supervisor need to take a look at how that had come about.
Was the employee so fearful that he or she distorted their report? Had the supervisor so ‘lost touch’ with the employee that they no longer knew what was going? Both require action on the part of the supervisor in his or her exercise of leadership.
The administration of salaries was separated from the performance discussion process altogether. That step alone encouraged discussion tremendously. Again virtually everyone agreed that the separation was a relief and that they could better concentrate on improvement planning knowing that honesty would not affect their raise (if any).
Raises were administered as follows: All employees received the same percentage of raise. The percentage was a figure based on the financial performance of the company. If a person was thought by his or her supervisor to be more deserving than others in the company a special exception could be generated.
Likewise, if a person was seen as particularly troublesome a special request could be made to severely limit that person’s raise or to eliminate it entirely. This was to be clear signal to the employee that they needed to improve drastically or should perhaps consider leaving the company. A high-ranking manager (in our case, the CEO) had to sign off.
This essentially ended the practice of raise administration as a ‘zero sum’ game. Many (if not most) companies make a total figure available for raises. That figure is then stated in terms of a percentage of total salaries. Each supervisor is instructed to ‘average’’ that percentage in administering raises among his or her employees. Thus, a given employee can only receive more than the average if another employee within the same supervisory unit receives less. This fosters competition within small units of the company. That is disastrous.
So from Ex Post Facto assessment, the focus was shifted to forward looking planning. This alone was a significant improvement.