Performance Appraisals: Biggest Problems and Solutions
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Problems with performance appraisals include:
Takes too much time
Can be gamed
Influenced by politics
Decreases morale
No clear link between performance and pay
Varying standards
Halo and horns effect
Personal biases including recency, confirmation, and overgeneralization biases
Comparison rating
Central tendency
Recency effect
Adobe
Problem
Annual performance reviews took 80,000 hours and the involvement of 2,000 managers. Employee performance did improve measurably. If anything, employees were less inspired and motivated. Turnover also increased.
Solution
Adobe discontinued the annual review and replaced it with regular check-ins instead.
Accenture
Problem
Accenture’s CEO believed that doing annual reviews just once a year didn’t make sense. He wanted an instantaneous performance management process.
Solution
Accenture implemented a system that was more fluid and allowed for immediate feedback throughout the year.
GE
Problem
They felt their HR organization to be excessively focused on process over outcomes. They also wanted feedback to be “frequent, faster, and mobile-enabled.”
Solution
GE eliminated their stack ranking (bell curve) system. They also eliminated the process of firing the bottom 10 percent each year. They’ve now adapted a philosophy where they emphasize connection, inspiration, and developing people.
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