An article by Kevin R. Murphy suggests that regularly evaluating employee performance is an expensive and worthless practice, and it is impossible to disagree with this opinion. There are a number of reasons for this, but one of the most important is that annual, quarterly, and any other evaluations are overloaded with indicators that are retrospective in nature and are not relevant to the present. Performance evaluations are the time for feedback between management and departments, but in the traditional approach, this time is used to analyse events in the past.
Regular Performance Evaluations
It is worth noting that performance evaluations are a biased practice due to the fact that it is impossible to apply the same approach to all employees. Moreover, evaluating people relative to each other base five or ten is pointless. It is important that during the assessment, management focuses on what was done well and what was bad, but these indicators were discussed during the work process in the first place. Therefore, what is the point of discussing what matters only for the past while it is necessary to think about what will happen in the future? Evaluation almost always takes place at the level of the company or that of a specific department or group of employees, which inevitably leads to conflicts as the personnel are divided into categories.
Interestingly, not all organisations adhere to the traditional approach and experiment with the format. For instance, some companies introduce a performance evaluation essay in which an employee needs to present their vision of their work. In particular, they are asked to evaluate factors such as changes achieved since the last review, what problems and interesting tasks they had to solve and how successful they were, what goals the employees set for themselves and what are the achievements.
After analysing their productivity, the employee sends this essay to their manager, which allows the two to communicate more substantively during the evaluation. However, what problem does this discussion solve? This is a tedious and time-consuming bureaucratic process in which companies all over the world continue to engage instead of transforming leadership and its interaction with the workforce.
Implications for Practice
If evaluating the performance of the personnel does not make much sense, the inevitable question arises of how to give employees feedback or influence their productivity. The system of motivation and productivity improvement depends on the size of the company; however, it is possible to identify certain approaches that can be considered universal. In particular, employees need to be paid an adequate salary, and it is essential to abandon the outdated bonus system. Regarding the latter, it should be noted that bonuses undermine the morale employees since they may not meet their expectations or surpass them, which in the long run, will produce the same result.
Many employees often expect bonuses, and this is the driving force that pushes them to commit themselves to their duties more. Companies should not give bonuses because it is a lose-lose situation: management demoralises an employee if their bonus is less than what they expect, and they raise their expectations if they surpass employee’s expectations only to have their expectations violated when it eventually ends up being lower than their ever-loftier expectations.
Needless to say, bonuses hurt creativity. The problem is that the majority of work is either knowledge-based or creative. Bonus incentives make employees overly reductive and narrow-minded. Instead of bonuses, leadership needs to revise employees’ salaries on time. It is necessary to focus on leadership and not on obsolete bureaucratic practices. This way, work will bring more pleasure and will be less formal, and the team will be grateful.
As Kevin R. Murphy suggested, to have an impact on employee productivity, managers need to redouble their daily management efforts. This involves regular conversations with subordinates and a daily, unbiased assessment of their work. This will allow improving the quality of their work in the online mode rather than retrospectively. If the work is accompanied by a constant dialogue, the assessment of performance will become simpler and will not be a source of stress for employees. At the same time, it is necessary to take into account the views of peers since they are a good source of information.
Concluding Points
Regardless of what has been discussed above, each company should develop its own approach to how to get the most out of its employees. Each organisation has a unique structure, and the method ideally suited for one company may not work in the same way for another organisation since there are no universal truths in the business world. However, it may be stated for certain, and it is a fact that performance evaluations are a waste of resources and time while the efforts should be reoriented towards constant feedback loops.