The way some performance evaluations are conducted, the employee and the company would be better off without them. Consider the case of "Don," an anonymous employee of an unnamed company, who posted his experience as part of an online contest looking for the worst appraisal. By the time February rolled around, past the deadline for conducting performance reviews for the previous year, Don was wondering when or whether his boss would make time for the discussion. It took him by surprise to get such ostensibly important feedback in the men's room.

"I happened to be entering the men's bathroom at the same time as my boss," he wrote. "Standing side-by-side at adjacent urinals, he remarked that he hadn't had a chance to go over my review with me, but now was as good a time as any." Don's manager said that he and others in the company were pleased with Don's work. The setting didn't quite convey genuine appreciation for Don's work. "All of this was bad enough, and a bit humiliating since we were not alone in there, but the summation was really priceless," he wrote. "Walking away from the urinal, he told me to 'keep it up' in the new year."

Don doesn't work for that company anymore.

His situation is extreme, but much of the humor in it stems from the problems with performance appraisals. Little in human nature prepares an employee or manager for the artificial aspects of the typical review. Many managers detest appraisals and delay them, implying to the employee that he or she is not important. The usual forms are just that: forms -- impersonal, one-size-fits-all, procedural, and lawyerly.

The Eleventh Element of Great Managing is measured by the statement "In the last six months, someone at work has talked to me about my progress." Some people think a thorough and accurate performance appraisal will suffice. But it's not enough. The most engaged employees say that their managers so regularly give them carefully considered advice and encouragement that when the time arrives for the formal evaluation, there are no surprises.

An untested assumption

Although performance reviews have been in place for generations, until recently, very little effort was given to understanding whether the process motivated employees or irritated them. "One may develop the most technically sophisticated, accurate appraisal system, but if that system is not accepted and supported by employees, its effectiveness ultimately will be limited," states one summary of the research. Another finds that "a statistical review of the evidence supporting the use of feedback (such as performance appraisal) suggests that providing personnel with feedback is like gambling in the stock exchange: On average, you gain, yet the variance is such that you have a 40% chance of a (performance) loss following feedback."

Many organizations implemented some version of a "balanced scorecard" following the logic outlined in Robert Kaplan and David Norton's 1996 book of the same name. The book can be found in nearly every personnel department of the world's largest corporations. Its logic is watertight: Long-term profitability is the product of a multivariate equation; a company's managers must pay attention to, and the scorecard must incorporate, many different aspects of the business if they are to perform as well as possible.

However, this ideal proves elusive when placed in the hands of human managers and employees. "Despite survey evidence that a growing number of firms are using balanced scorecards for compensation purposes, relatively little is known about the implementation issues associated with scorecard-based reward systems," wrote three University of Pennsylvania professors who scrutinized a bank that tried and then abandoned a balanced scorecard.

In the case of the bank, the judgment given to managers apparently backfired when they monkeyed with the math, disregarding factors that were predictive of financial success and incorporating factors that were not, and changing the criteria from quarter to quarter. "This evidence suggests that psychology-based explanations may be equally or more relevant than economics-based explanations in explaining the firm's measurement practices," wrote the researchers.

Once again, human nature trumped the best laid plans of corporate strategists. Such bumps along the way are not an indictment of balanced scorecards, but they do demonstrate that any corporate strategy is only as good as the managers who bring it to life in the day-to-day routines of the teams they supervise.

Several recent twists make performance appraisals more interesting, if not more effective. For example, 360-degree feedback injects a juicy aspect of gamesmanship into the process, allowing underlings to fire back at bosses or sideways at colleagues. Such systems are more likely to grade style rather than substance and usually focus on weaknesses rather than strengths. The practice of asking employees to assess themselves presents its own dilemma. "The idea of this workplace ritual that is gaining popularity is to help managers and employees level with each other, applaud achievements, set new goals and identify job-training needs," wrote columnist Jared Sandberg in The Wall Street Journal. "But these self-evaluations have instead been put on the list of annualized torments, ranking up there with taxes and dental probes. There are, after all, an infinite number of ways to self-incriminate."

"Ostensibly," he continued, "you rate yourself on a scale from one to five, usually in preparation for a follow-up interview. But let's be frank. You really end up portraying yourself in one of two ways: A) Self-flagellating lummox dumb enough to enumerate weaknesses that can be used against you at a later date. B) Self-aggrandizing egomaniac who thinks 'no' means 'yes,' insults are a form of flattery -- and you're pretty good-looking to boot."

The caveat given by "Dilbert" creator Scott Adams has plenty of truth in humor. "The key to your manager's strategy is tricking you into confessing your shortcomings. Your boss will latch on to those shortcomings like a pit bull on a trespasser's buttocks. Once documented, your 'flaws' will be passed on to each new boss you ever have, serving as justification for low raises for the rest of your life."

Copyright Ó 2008 The Gallup Organization, Princeton, NJ.  All rights reserved.  Reprinted with permission.  Visit The Gallup Management Journal at http://gmj.gallup.com/

Article from The Gallup Management Journal