Performance Appraisals: Biggest Problems and Solutions

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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