"Why appraisals don't work!" shrieks the headline of many articles on the topic of performance appraisals.

We know why without reading on. Managers don't take the time or care to fully evaluate. Appraisals become part of the routines and rituals of the organisation. No one reads the appraisals. Appraisals become a trade-off between the desire of the employee to be seen in a good light no matter how they performed and the personal prejudices of the manager.

What the article headlines should read is, "Poor performance appraisals do not work". Just the same as poor strategy and tactics do not work, poor process design does not work and poor leadership and management do not work.

Performance appraisals, done well, are key to the development of talent within an organisation. Without a formal discussion about, and record of, performance, evaluation of our people's capability and willingness is left to informal chats between manager and employee. Whilst these chats are an important part of a coaching routine, the circle of people who have knowledge of a person's performance is too restricted to be useful.

Most performance appraisals that I have seen fail the first requirement of an appraisal. That is, to discriminate performance differences between one employee and another or improvements in, or deterioration of, an individual's performance.

To adequately advise, coach and counsel people on how to improve their performance we must be able to detail what makes up performance. To be able to adequately appraise performance of individuals in a team for the purposes of recommending future remuneration, that detail of the evaluation must be comparable between employees. That is, a standard method of discriminating performance.

Six independent variables should be used in any performance appraisal system to discriminate performance.

Quality

The first variable is the quality of work. The question to be answered is: "Did the employee meet the job performance requirements set out for them over the appraisal period?" This is not question about how, or when they did what was required but what they did. An individual should only be rated on a maximum of five job performance requirements. Anymore makes it difficult for the manager and the employee to know what the priorities are.

Job performance requirements might include:

Quantity

The second variable is the quantity of work produced. This variable discriminates between two employees who do equally good quality work, achieving their job performance requirements, but have different levels of output.

For example, two code cutters in an Information Technology (IT) company may have similar quality of work with regard to rework and fixes required. However, one employee may take 30% longer to create code to the same quality. Or a restaurant server may be able to handle twenty covers with good feedback and revenue per customer, but another struggles to handle more than ten covers to get the same result.

Discriminating between quality and quantity allows a manager and the employee to focus on what needs to change, rather than getting involved in a poor quality discussion about "performance". One can praise the quality and seek suggestions to improve quantity or vice-versa.

Job Knowledge

The third variable is job knowledge. Two employees may do equally well in terms of the quality of their work and the quantity of work they complete. However, one may have done so in a manner that required other people to help out to make up for their poor knowledge or skill, whilst the other required no such help.

This discrimination may be expected between a person new to their position and an experienced hand. However, if the discrimination exists between two equally experienced people, then whilst both are praised for the quality and quantity of their work, one would be coached to improve knowledge and skills to improve the productivity of the team.

Too often I have seen managers showing people how to do their job regularly and then giving them a fulsome appraisal because the work they did was of good quality and at a high level of output.

Initiative

The fourth variable is initiative. Two employees who do the same quality and quantity of work requiring the same degree of help can be discriminated by their level of initiative. One may be a complete self starter who understands their role in the organisation and the tasks which need to be done to achieve the daily and weekly results the organisation requires to meet its goal. They do not require to be told what to do. They just get on with what they know they have to do. Others may always wait for instructions. The former are a huge boost to productivity. The latter are a significant drag on productivity.

Low levels of initiative are usually caused by:

For the first point, communicating and coaching may be required.
For the second point, coaching and training may be required.
For the third point coaching and counselling may be required.

Dependability

The fifth variable is dependability. People who regularly do not meet agreed deadlines are a drag on team culture and productivity. The same is true for people who regularly arrive late at work. People who deliver high quantities of good quality work without help and who use their initiative, still need help to improve their performance if they are not dependable.

Adaptability

The sixth and last variable is adaptability. Adaptability has two contexts, tasks and approach to change.

Many people believe that they need to, "only do the work in my job description". This attitude, whilst understandable for highly skilled tasks is unacceptable for unskilled tasks. When a bus load of tourists arrives at an hotel and the front desk is a porter down, the tourists do not care if the front office manager or the restaurant staff's job description has no reference to storing and transferring luggage.

It is said that whereas ten to twenty years ago periods of stability in organisations were punctuated by change, now change is punctuated by periods of stability. Continual opposition to change is a drag on organisational culture and productivity. People with equal levels of performance as measured by the other five variables can be discriminated by their attitude to changes big and small and coached to improve their performance.

Summary

Performance appraisals are a very useful tool for managing people. However, the first requirement is to be able to adequately discriminate performance. A performance map that can discriminate between all levels of performance measures: