The performance appraisal treadmill

In The Paradox of Performance Pay, Allan Hawke shows how it has clearly led to decreases in organizational performance.

Peter Scholtes, who has researched and written extensively about performance, appraisal and pay, argues that such a performance ”management” regime is inherently the wrong thing to do because three faults are common to all variations on the theme:

  • It doesn’t work.
  • It’s wrong to focus only on individuals or groups, because most opportunities for improvement involve systems, processes and technology.
  • Performance ”management” is judgment, not feedback; it’s a hierarchical dynamic.

W. Edwards Deming called annual performance appraisals one of the five deadly diseases of management. Performance ratings are nothing more than a lottery, Deming said in 1984. This pertains to all levels in the organization.


  • Arbitrary and unjust system
  • Demoralizing to employees
  • Nourishes short-term performance
  • Annihilates team work, encourages fear.

Perhaps the performance appraisal treadmill is keeping organizations from testing out and adopting better management models for the networked economy. How could anyone possibly show progress in 365 days? It also makes one wonder about the effectiveness of publicly-traded companies that get a ‘performance appraisal’ from the market every quarter.

JFK Report Card 1930

Performance appraisals are like academic grades and keep the focus on the individual. In the collaborative, social enterprise this is counter-productive. There is no place for this practice in doing net work. In today’s enterprise, work is learning and learning is the work, and it has to be done cooperatively.

9 Responses to “The performance appraisal treadmill”

  1. Brent MacKinnon

    Hi Harold,

    Something always stuck in my craw about performance appraisals and your post has finely brought me home to what bothered me. I didn’t like giving PA’s and I didn’t like receiving them – even when the reports where well intentioned and positive. My school experience was the first place I sensed a major hoax at work. The hoax being systemic processes that supported this flawed management (evaluation) practice.

    I agree with the view that altering those system processes to improve individual and organizational performance outcomes is far more critical than focusing on employee performance. I’m going to use that research in my conversations with management when we talk about how social learning supported by social media tools can alter service outcomes. The wirearchy principles will be another conversation piece that will help me talk with managers about workplace learning and performance outcomes.

    Thanks for shining a light on something that has bothered me for the last 50 years or so.

  2. Ralph Mercer

    PA may be a sin in management, but a necessary evil in selecting and evaluating leaders. Can we do it more effectively and fairly yes but at the end of the day the principles of leadership are reasonably constant.

    • Harold Jarche

      Perhaps that is why the culture is so slow to change. The hierarchy promotes those in its own image – speaking as a career Captain 😉

  3. Jon Husband

    PA’s ..

    Speaking as consultant who has worked with some major corporations to develop what were supposed to be leading-edge performance appraisal and managements schemes, and then helped coach their implementation …

    .. almost all were virtually equivalent to providing an adult version of a grade school report card.

    True performance management that is respectful of an individual’s motivations, capabilities and dignity as a human being would in my opinion involve an ongoing conversation between almost-peers, while minimizing the power politics at work.

    In that context I will always remember David Weinberger’s “Conversations happen between equals. You can never have a real conversation with your boss”. there’s always the possibility that something is or may be at risk.

    Heck, that’s the same between friends, partners, etc. EXCEPT for the degree / level of emotional trust involved. few become real friends or real partners without passing through some rocky, tough and threatening exchanges.

    I for one am not optimistic about the future of traditional PA’s.

  4. Inette Dishler

    Thanks Harold for shining another light on this. I’ve been saying the same thing for years!


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