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The Brutal Truth About Performance Appraisal

I read in the New York Times recently that only one in ten CEOs believes in the effectiveness of performance appraisal. This appalling statistic makes perfect sense to me. It explains the collapse of the West, among other things. I'm not surprised our captains of industry have such a poor opinion of performance appraisal. If their accounting systems displayed the same lack of logic, we should read in the Times, no doubt, of their despair at financial reports. The evil lies not in the theory of performance appraisal but in its practice. I see good systems only rarely. What I see mostly are laughable and or useless systems. Not long ago I got an email from an executive at a central bank, which shall remain nameless lest they sue. He attached a copy of the appraisal form used by the bank and asked, "in view of my experience" what I thought of it. At first glance, it looked perfectly ordinary. It had all the usual things: KPIs, scales, commentaries. There were also some fancy-looking formulas for calculating performance scores. I examined them up close and personal, to see what they did under pressure. But the more I tested them, the less sense they made. The formulas were unsound. I thought, am I doing something wrong here? After all, this is an instrument of appraisal used by a bank, and not just any bank, but a central bank, charged with conserving the wealth of a nation. So I emailed him back: Excuse me, Sir, but what does this term do here, and why is this multiplied by that? I sought an answer but got none. (I think he was embarrassed. They must have been using that form for years. Ouch.) With its flawed logic, the bank's appraisal system falls gracelessly into the laughable category. In many organizations, the general standard of performance appraisal is low, which is why CEOs have so little faith in it. They see appraisal as a ritual, a form to fill out, file and forget. Thank God that's over for another year. That's how most performance appraisal systems work, and why so many don't. Those that do? Good performance appraisal depends on good psychology. The idea is to bring about improvement, to make Maslow's garden bloom, if you will. Without the understanding of the agency and purpose of appraisal, all the forms and formulas in the world are useless. Extract from NASA Culture and the Future of Business by Archer North, August 6, 2015. Next: The Wisdom of Rats, or Why Performance Appraisal Matters





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