When I spoke at a Human Resources conference, I asked a room full of HR professionals if they do performance appraisals in their companies. Just about everyone in the room raised their hands. One person in the front row said, “Of course we do performance appraisals, we are HR professionals!”

Then I asked another question. I asked the group how many of them enjoy the process.

In a room full of HR professionals, there was not one hand raised.

As people looked around, there was a nervous laughter. This same group that owned this performance appraisal process and had so proudly raised their hands were now admitting that the process was painful. In my experience as an engineer with a decade of manufacturing experience, I can say that painful process indicates broken processes.

I pushed on and asked how many participants think their employees enjoy the process. Again, not a single hand went up. The laughter ceased as the group came to the realization that nobody likes performance appraisals.

In helping to facilitate better business communication with multiple companies in multiple industries, I think we know why.

1) Performance Appraisals Are a Show

As a manager, you sit down with your employee and tell them that you want to have an open and honest conversation about his or her performance. However, you both know that there is potentially a bag of money sitting behind you and the employee will get all, some or none of it. This does not inspire an open and honest conversation. In fact, it does quite the opposite.

The employee will try to put on a brave face and tell you that everything is just fine. They are trying to demonstrate for you why their work justifies the maximum possible raise and even a promotion. They are showing off for you. That is, if they don’t believe that their efforts are futile. Some employees are so checked out of the process that they will sit quietly and just let it happen.

The employee isn’t the only one putting on a show. In most organizations, the manager doesn’t really have full control over the size of the raise or the magnitude of a potential promotion. This results in the manager putting on the show of telling the employee that they did what they could. High performing employees hear managers say things like, “if I could, I would give you more”. This is hardly motivating.

People like authenticity and leadership team development opportunities. Unfortunately, this process inherently lacks both because it is tied to money.

The truth is that money is a poor long-term motivator. Unless we are talking about a high-powered outside sales team that likes to use money as a scorecard, the average person just wants to get paid fairly and is motivated internally. Internal motivation is inspired when people work in the right environment where they get to work within their strengths, with some autonomy, towards a common purpose. People need to know why they do what they do and then they will be more open to a conversation on how they can do it better.

2) Managers Don’t Know how to Develop People

Managing and developing people is a challenging skill set that requires an understanding of how people are motivated, how they communicate, and how to balance empowerment with accountability. Yet most managers are promoted to their positions because they were good employees. Very few managers receive any formal training on how to lead and motivate people.

By way of effective business process consulting, we coach managers on a regular basis who are incredibly thirsty for more insight on how to develop their staff. This is one of the reasons that leadership books are so popular—because managers are searching for resources outside of their companies on how they do a better job.

Managers tend to focus too much on the process they are managing rather than on the people who actually run the process. This leads managers to blame people for failures in the process rather them helping them improve their performance. Many managers struggle with their own management style coming across either too hard or too soft. This leads to frustration of both the manager and employees and often is the root cause of toxicity.

Training and equipping managers with basic leadership team development skills is crucial. Management is hard because people are messy and complex.

3) Once-A-Year Management Philosophy

I was giving a presentation to executives of a mid-sized company on how to lead and motivate employees when one executive expressed concern with how much time his managers would need to spend on leadership team development. He said, “You don’t understand. We have working managers here. They don’t have time to lead and develop their people.”

Many performance appraisal processes are annual discussions with employees and, unfortunately, many managers look at this as a sign that they should only invest time once a year in really focusing on performance and development. This leads to many employees being surprised by conversations that occur in appraisal or discussion about topics that happened months and possibly years before.

A once-a-year process teaches managers that their role is really about the process and not the people. Business leaders need to understand that the most important job of a manager is to lead and develop people. We offer management seminars that can help leaders and managers of all types to gain the skills and knowledge to motivate and improve their team strengths. The most successful organizations know that managers are the champions and shepherds of the organization’s culture.

4) One Way Conversations

The typical performance appraisal involves a lot of manager talking and very little employee talking. There is often little to no attention on what the manager and the organization can do to help the employee be more successful.

The reason this is such a problem is because the employee is the person who really has the power over their own performance. The employee will need to decide what changes they will make and what new skills they will develop. The employee will be most successful if they own their own development with guidance and help from the manager.

This requires a two-way conversation with the manager serving as a coach or mentor giving honest feedback but guiding the employee to their own realizations and conclusions. Occasionally the manager will need to be more authoritarian, but this should happen live, not in the performance review.

Another reality in organizations we work with is that the managers don’t have all of the answers. Having open and honest two-way discussions with employees on a regular basis is often an opportunity for the manager to develop their own skills on how well they manage and communicate. We often see employees give managers insights on how they can be more effective in communicating and helping improve their leadership team development—this is a sign of a very healthy relationship.


Unfortunately, most performance appraisal processes are broken. We recommend a separate “Check-In” process where managers and employees sit down with each other on a quarterly basis (or more often for new or struggling employees) and have a mutual discussion on how they can improve their team dynamics with each other and with others. We really like the “Do More, Do Less, Stop Doing” conversation. This goes both ways. Employees are trained, just like managers, to give constructive feedback in a mutual effort to improve business communication and effectiveness.

Overhauling your process will not only improve how people feel about the appraisal process, but it will also help to support building a high-performance culture based on engagement, focus, and accountability.

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