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By Tomas Chamorro-Premuzic Friday, 21 August 2015

Why ditching appraisals is a stupid idea

The HR fad for scrapping performance reviews won't benefit either employers or employees.

The past few months have seen a great deal of discussion about the uselessness of performance evaluations.The Wall Street Journal and The New York Times, a cover feature in Harvard Business Review, and a global PR campaign by Accenture - the most prominent corporation to announce they have ditched annual performance evaluations - all suggest that organisations are ready to stop judging what employees do (and don't). But is there a clear rationale for this latest HR fad? Is it simply a populist PR move - surely most employees like the idea that they won't be evaluated any more, not least because they are coasting or slacking in their jobs - or the next stage in scientific management?

On the one hand, firms could be forgiven for eliminating appraisals. The main reason is that most of them are indeed rather pointless: they are subjective, political and rarely based on reliable data; and few managers are willing or able to provide what employees need the most, which is negative feedback. On the other hand, completely scrapping them isn't the solution.

First, in any organisation performance reflects a Pareto effect, whereby 20% of the workforce accounts for 80% of productivity. Ignoring who the 20% are, or being unable to distinguish between them and the rest, will alienate and repel talent. Second, performance evaluations are the best way to set compensation, bonuses and rewards, and most employees agree with this. Third, unless employees are provided with feedback, they will have no idea of how to get better. Self-assessments don't work because most people think they are better than they actually are, and this affects how they evaluate their performance at work.

Fortunately, there is no reason to take this HR fad seriously. As a matter of fact, the most common argument for ditching appraisals is to replace them with some form of data or talent analytics. That is, the idea that if we can put in place monitoring systems that track employees' behaviours and link them to organisational outcomes, would make human judgments of employees' performance irrelevant. But only because more objective metrics are used in lieu. So, if the goal is to make appraisals more data-driven and accurate, bring it on. Let's not forget, though, that sharing this data with employees is as important as gathering it.

Dr Tomas Chamorro-Premuzic is an international authority in psychological profiling, people analytics, and talent management. He is the CEO of Hogan Assessments and professor of business psychology at University College London and Columbia University. Follow Professor Chamorro-Premuzic on Twitter: @drtcp

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