December 01, 2006

Performance Appraisal System – First Impression

Today’s Thought

Pay by Effort? Pay by Result?

Focus on effort, ignore the result? No way. Business is not charity
Focus on result, ignore the effort? Too much variation inside, can hardly say it is fair. Result by itself means inaccurate information and even completely misleading.

Performance Appraisal System

Like people say, it is hard to measure individual??s performance. But we still have to measure it, otherwise how much we are going to pay for our employees? In my opinion, here comes the second best solution. Performance Appraisal System. It may have mainly two negative aspects:

1 This system is naturally faulty:

Because just can’t measure individual??s performance with so much variance inside. And also, there is no standard method exists to measure individual’s performance, one method may apply well say 70% on one person, but due to different condition, same method may only be 30% good on another person. Human are very different from each other.

Such system creates an environment allure people not to do it properly. Once set the target, people will always pass it. And it also encourages competition inside the team but not collaboration.

2 The people inside system create problem:

Data collect from employee may just worthless, completely random figures. Poor Income Poor Outcome. The result is misleading and not very helpful. The people who handle the data, say outside auditor for example, may lack knowledge on our organizational system, not understand the existence of unique variation, the result will surely misleading.

Consider the boss who decides to apply such PA system, from Nelly’s example, set a loose control on the results, give average mark to everyone, what is the purpose to have PA system in the first place?

From four aspects: Knowledge, System, Variation and Psychology. If the leader or manager don’t understand any of these, they will not able to make correct decision on how to judge people’s performance from the results of PA system.

Sharing Same Philosophy

Things exist for purpose, it continuous due to demand (not always positive…). In this case, PA exist because it is the most feasible approach, not the best one, but the available one. Like CV, exam, all those measurement tools, none is actually good (perfect) at measuring. From ancient time until now, because (most^^) people are not mind reader, we need some kind of method to measure.

When team3 had the meeting this noon (plus guest speaker Ray O_o... ...), we discussed quite a lot on the positive and negative elements of PA system. I think, this method got positive element because it fulfill people’s (basic) requirement. But the negative element is not just about the straight results from this approach, such as give someone incorrect salary or upset few employees. The major negative part is, this system bring (or at least give space for) competition inside the team, therefore teamwork will be destroyed. This long term effect is the worst.

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