When will managers stop abusing their most valuable assets (employees) with annual “stress tests” known as performance reviews?

In today’s business environment, organizations are constantly seeking a competitive advantage in the marketplace in areas such as products/services, employee recruitment/retention, and customer loyalty. Can there be a better competitive advantage that a competitor can’t duplicate than a fully engaged and productive workforce? However, dozens of research projects have documented that performance reviews are a major contributor to negative employee relations, which can negatively impact productivity and profitability. Here is a sample of the research.

o In 1965, the Harvard Business Review reported the results of a landmark study by Herbert Meyer, Emanuel Kay, and John French, Jr., that tested the effectiveness of traditional performance appraisal systems at General Electric. Bottom Line: Performance reviews don’t work and often do more harm than good.
o A 1994 survey by the Society for Human Resource Management (SHRM) found that 90% of appraisal systems were unsuccessful.
o Timothy Schellhardt in The Wall Street Journal (November 19, 1996) noted that 90% of managers describe performance appraisals as “failures.” Schellhardt went on to say, “If less than 10% of your customers judged a product to be effective and 7 out of 10 said they were more confused than enlightened by it, you would abandon the product.”
o A 1999 survey by the Michigan Bar Association noted that only 3% of attorneys felt that an appraisal would benefit an employer in litigation, while 44% felt that an appraisal would benefit the employee.
o Consulting firm People IQ, in a 2005 national survey, found that 87% of employees and managers felt performance reviews were neither useful nor effective.

With research results like this, is there any question as to why the Dilbert cartoons are so popular?

Quality guru W. Edwards Deming, Ph.D., in his book Out of the Crisis, described performance appraisals as one of the 7 Deadly Sins that affect employee relations, productivity, and business improvement. the quality. Dr. Deming described the performance appraisal process as creating fear, destroying teamwork, and fostering rivalry.

Dr. Deming was right. Traditional performance appraisal, with numerical rating scales and a poorly defined continuum of qualitative criteria, attempts to fit square pegs into round holes. The typical company performance appraisal attempts to funnel the full range of professional, non-professional, and managerial positions through the same generic and subjective criteria in an effort to “individually rate” each employee’s performance.

The solution is not the removal of performance measures. The solution is a new, objective methodology for evaluating performance and improving productivity known as Employee Process Assessments. Below are the three steps to start and implement an Employee Process Assessment Program.

Step #1 – A process-oriented approach
A key component of the Employee Process Assessment Program is a manager’s capacity and ability to identify the responsibilities, behaviors, and expected results of each position that reports to them. In most companies, a list of job responsibilities, commonly known as a job description, may appear as follows:
o Prepare a variety of reports.
o Handle customer complaints.
o Provides accurate and timely information.
o Establishes and maintains a close relationship with clients.
o Maintains complete familiarity with competitors’ products.

These exhaustive statements do nothing to describe the specific and important tasks that each function comprises. For an employee whose financial livelihood depends on the effective execution of his work, specificity and clarity are very important. For any appraisal system to be truly effective and meaningful, it must identify the core activities of the engagement, the most significant process steps for each activity, and the minimum quantitative expectations that each activity must meet.

The Employee Process Assessment Program provides a simple format to help managers and employees document the functions of a job in a process-oriented format. Job responsibilities that are written in a process-oriented format accomplish the following:
o An employee will have a list of responsibilities and performance standards that are 100% objective.
o A manager can identify the major process steps and results for which an employee will be accountable.
o A manager can monitor changes in the number of activities and activity time commitment for each employee as those activities increase or decrease with business volume.
o A manager has the flexibility to add time standards to each process step as a way of assessing the cycle time for each step and for an activity/process as a whole.
o The employee and manager will gain a better appreciation of process steps that rely on outside input. As such, an employee would not be responsible for a given result if situational constraints, over which the employee has no control, affect the result.
o The manager has the opportunity to establish criteria that can be used as the basis for objectively evaluating an employee’s performance and has laid the foundation for continuous improvement at the micro/individual level.

Step #2 – Observations and Counts
The days of one evaluation form for all positions are long gone. If we are going to reduce employee turnover and improve job satisfaction, we must address the day-to-day problems of work (the processes) that affect every employee. Process Evaluations represent an important tool to improve the quality of work.
In evaluating any performance, a manager is limited to two methods of measurement:
1. Count: make observations and count the results, as well as document exception reports.
2. Judging: the process of forming an opinion by discerning (grading) and comparing (classifying), rather than counting.

The problem with traditional performance appraisals is that they use the judgment measurement method in which managers express opinions about performance. As such, the subjective process of forming an opinion about an employee’s performance is what has given rise to Dilbert’s famous cartoon: “I don’t have an attitude problem. You have a perception problem.”

The main difference between the Employee Process Assessment Program and all other programs is the method of measurement: counting. The Process Assessment Program uses a series of brief, specific observations that allow a manager to count the results. The concept behind the Process Assessment Program is similar to the concept used in many organizations implementing Six Sigma Programs: random sampling and measurement.

The Employee Process Assessment Program uses this same sampling and measurement concept without complicated charts or graphs. The Employee Process Evaluation Program provides an easy-to-use tool for managers to make periodic performance observations, as well as a tool for counting the results of those observations. With periodic observations completed and feedback provided, a manager and employee are now ready to conduct a process evaluation.

Step #3 – The Process Evaluation
Since the Process Evaluation was designed using a Continuous Improvement methodology, there are some very basic tools and rules to carry out the Process Evaluation, such as:

o A responsibilities update tool.
o A 3-step format to carry out the Process Evaluation.
o A 2-step process to analyze and correct a performance deviation from a standard.
o A methodology to analyze and improve each responsibility and standard related to the “Three Elements of Competitiveness”.

A process appraisal creates an objective, collaborative work environment where the annual appraisal is not simply an exercise to see how high an employee can rate on an arbitrary 5-point scale. Rather, process evaluation becomes a joint exploration of ways to improve the organization by maximizing the contribution of an individual employee.

Process Assessments = Competitive Advantage
Although employees don’t like to think about it, they are “spokes” in a “wheel” and the force of any one wheel is a function of the force of the individual spokes. All traditional performance appraisal programs have been implemented with a very noble goal: to strengthen individual “spokes” thus creating a stronger “wheel”. In theory, these performance appraisal programs should work. In practice, these programs have had a well-documented negative impact on individual and organizational performance.

The Employee Process Assessment Program is a paradigm shift in the way performance improvement is executed in the 21st century.

As noted above, the Employee Process Assessment Program was modeled after Continuous Improvement (CI) programs that are being used by thousands of organizations. When one looks at the results of CI programs, the company-wide results are impressive (for example, a doubling of productivity/performance; cycle times and inventory reduced by 50%; workforce reductions of 20% 50% due to attrition, not layoffs; elimination of unnecessary process steps and quality improvements by moving closer to Six Sigma standards, etc.).

Employee process assessments, if done correctly, have the potential to achieve results at the individual level commensurate with the company-wide achievements listed above.

Former GE CEO Jack Welsh, in his 1993 book Control Your Fate or Someone Else Will, stated, “Businesses can’t provide job security, only customers can.” One of Mr. Welsh’s themes throughout the book was that corporate viability (i.e., profitability and related job security) is a function of:
– Satisfied and loyal customers, which is a function of
– Quality products/services, which is a function of
– Employees who are satisfied and fulfilled in their employment relationship.

As such, the absolute starting point for achieving job security, corporate profitability, loyal customers, and quality products/services is an engaged and loyal workforce. Achieving an engaged and loyal workforce was best characterized by Mr. Welch when he stated, “Instead of looking for better ways to control workers, free them.”

The Employee Process Assessment Program is a methodology to unleash and engage employees that will have a major impact on an organization’s competitive advantage.

To view details of the Employee Process Assessment Program, visit the Lukesh Consulting Group home page at http://www.HRcontrarian.com and click on the link for Process Assessments.