I attended to the Agile Bazaar event on January 31 2008 at the Worcester Polytechnic Institute where Mary Poppendieck presented “Appraisals and Compensation: The Elephant in the Room“. She will likely do presentation it again at the Agile 2008 conference in toronto. Not to spoil it, I will only give the thread line.
Mary went through a brief history of performance appraisals. While it all started 2,000 years ago in china, appraisals became universal (in the US) in the 90s.
So if every companies uses them, they must be extremely useful, right? Unfortunately not.
Mary exposed 8 underlying purposes supporting the mechanism (to name a few: motivatation of employees, identification of candidates for promotion, identification of training needs) and 6 faulty assumptions (including motivation as an external factor, focusing on the individual -or team- rather than the system and the delay of mainly negative feedback) .
Mary says that there is no valid research showing benefits of performance appraisals. Simply said, “it doesn’t work“. Her biggest complain is that appraisals target individuals (sometimes teams) rather the system itself. She also condemns judgment rather than feedback (system dynamic).
Mary went over the false assumptions behind individual pay-for-performance (money, motivation, individual assessment), and the negative effects they have on the system.
She finished by a case study done by HP across 13 organizations over a year 4 year period where each division implemented a different type of incentive plan. The results are just mind boggling. They all failed and got canceled.
So what is she proposing to do instead?
Provide every day for
- clear goals and priorities
- team work
- pride
- feedback
- cadence
- continuous improvement
The key here is that yearly of bi-annual appraisals are replaced by a daily engagement of management with the team. Promotions and salary adjustment are evaluated (team wide) on a regular basis – rather than once per year.
Mary closed saying that focus on training, delegation of the decision making process within an egalitarian culture, good pay and reciprocal commitment between the employees and the company are the pillars for high performance.
She also discussed a case study made around a large experiment done by HP. Wanna hear the punch line? Come by agile 08…
Now, if your organization is still mandating appraisal, check out Jeff Sutherland’s review process.
