Why Ditch Annual Performance Appraisals

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“You can motivate by fear, and you can motivate by reward. But both of those methods are only temporary. The only lasting thing is self-motivation.”

Homer Rice, a former American football player, coach, and college athletics administrator

Today one of my instructors sent me an article from the Harvard Business Review called The Performance Management Revolution written by Peter Cappelli and Anna Tavis. In it, they cite that a tension between traditional and new approaches for managing people has surfaced and as a result, over a third of today’s companies have abandoned traditional appraisal review processes. This is great news. The change began in the early 2000s, first in technology companies using agile practices that require higher levels of self-governance and team collaboration to meet the needs of our ever more complex and fast-changing world.

For decades, leaders failed to see that by engaging in annual performance reviews, they unwittingly fostered negative internal competition, fear and scarcity thinking, contributing to inferiority feelings that result in increased internal and external struggles. Leaders are now beginning to recognize that these reviews discourage creativity and reduce morale, all while generating unnecessary paperwork and wasting time. That’s because ranking, rewarding and ridding people from organizations as though they are expendable commodities comes with a high price tag. This is a throw-away transactional mentality and systems approach.

Command and control tactics include coercion (autocratic), incentives (bribing), appraisal (judging) and overcompensation (enabling). Each has always been accompanied by bias, favoritism and abuse of power because they presume power-over to be legitimate as a tactic in managing people and performance. For too long, business leaders also believed it to be right and expedient to fast-track behavior by treating people as if they are fixed in their capabilities.

Companies today are now beginning to focus instead on developing people’s untapped potentiality. They realize that appraisals are nothing more than bestowing positive or negative judgment from above in an attempt to manipulate compliance rather than inspire commitment. They realize frequent, supportive conversations go further, without costing everyone involved collateral damage.

What I found interesting in this article is that while more organizations are focusing on supportive conversations to develop staff, many don’t have a rigorous process or an organized system for how to best do so, nor do they build such processes within a larger context of a healthy culture model that eliminates control and extrinsic motivation as tactics and replaces them with intrinsically motivating and responsibility-based and purpose-based systems instead.

I was sent this article because one of my team knows that the LifeWork Systems framework includes detailed monthly mentoring of all staff (from CEO to front-line employees) as a non-negotiable part of our responsibility-based approach used during and after basic culture transformation training. Our framework IS a 3rd option as referenced in this article. We know that to develop their people, business leaders have to provide more than time and attention alone. They must dismantle control models and create standardized, professional behaviors that honor power-within people and develop their emotional intelligence, intrinsic motivation and purpose-and values-based ways of operating with one another. Only then can competency be developed alongside other intrinsic motivators such as a sense of meaningfulness, choice, and progress. This article expresses that business leaders are beginning to see people as their greatest asset. Let me know if I can help you to develop your people in the same proven ways we have demonstrated this skill in many client sites!

This article is published in St. Louis Small Business Monthly in the column on The Extraordinary Workplace, September 2020.

Why People Hire LifeWork Systems

Business owners and executives, community leaders, parents, educators and individuals hire LifeWork Systems because they know that effective conditions and conversations make all the difference in building trusting relationships, achieving dreams, and creating solutions and innovations for our evolving world. When people are happy and responsible, emotionally and socially intelligent, confident, and appropriately seen, heard, and supported, they always exceed expectations. We help instill into every person common concepts, terms, tools, and processes that result in healthy, happy, caring and contributing individuals, teams and organizations. Our mission is to create a world in which all people love their lives!

We appreciate you being here on our website and encourage you to reach out to us directly at info@lifeworksystems.com or  314.239.4727. May something we offered in this article and website help you love YOUR life ~ because YOU matter!

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