PERFORMANCE APPRAISALS: Awakening the Force of Reason | 人事考課: 理性の力に目覚めて

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This article first published at The HR Agenda Magazine [March-June 2016 issue].

A couple of weeks ago, we were presenting to one of our clients a number of recommendations to improve their organization’s performance management system. One of such recommendations is to completely do away with the practice of annual performance appraisals (PA) and also stop linking the results of any performance appraisals to pay, bonuses or even promotion decisions.

Not surprisingly, the initial reaction of the HR Department was “What?! How will you know that they are performing or doing their jobs? How are you then going to pay the people?”

When I saw this instant reaction from the client, I literally saw a mirror image of my own reaction to such a concept several years ago when I was still a very strong advocate of the pay-for-performance and MBO (management-by-objectives) models. In fact, for the most part of my career as an HR professional and consultant, I have advised, designed and implemented MBO-type of performance management systems with a number of our clients. I even taught these principles at my classes at schools where I teach.

It was not until a couple of years ago when one of our JHRS members based overseas asked me if Japanese companies still do appraisals and link the results to make compensation decisions. Obviously, my immediate response to the question was “Of course they do. How else can organizations evaluate performance and pay their people?” (That is, exactly the same line of questions from our client as described earlier!)

However, there was something in that question that bothered me. Why would this person ask me such a question in the first place? What was happening outside of Japan on this aspect of HR management? Are we missing something?

In hindsight, that was actually my own awakening to the force of reason. I began to look deeper into the effectiveness of PA in actually improving individual performance and company profitability. I started to read a lot of articles and books on this topic. I participated in a number of webcasts and seminars to quench my thirst for more information and insights. Whenever I attend international HR conferences, I reached out to subject matter experts on the topic and learned from their wisdom on this issue. Some of them have even written articles discussing the topic. To my surprise, I found out that most of the answers to my questions are simple, pragmatic, and yes, plain common sense.

In this issue of The HR Agenda, we are pleased to share with you some of the most advanced thinking, best practices and real-life experiences on why a growing number of organizations are abandoning the use of conventional PA and using a number of alternatives in its place.

Be forewarned though that you will probably be shocked or even deny the arguments presented against PAs when you read the articles in this issue. But don’t worry. We expect you to react in such a way. After all, businesses have been utilizing PAs for more than 50 years now. As such, the conventional PA concept has inherently been embedded in how we manage people’s performance. It’s not surprising if we have blindly accepted and followed the assumptions or commonly-held beliefs on what PAs can supposedly do in the workplace.

Whether you eventually agree or disagree with the articles in this issue, there is one request that we would like to ask from you: please keep an open mind.

It is not our purpose to convert everyone to immediately abandon their PAs after reading these articles. What we are aiming to achieve is to start a vigorous and sustained discussion on this issue where both the pros and cons of conventional PAs and their alternatives are scrutinized, dissected and brought out in the open so that organizations and HR professionals can make an informed decision on whether to stay with their current conventional PAs, abandon them or create hybrid solutions.

In doing so, we make the pages of The HR Agenda go down in the history of HR management in Japan as the birthplace where these discussions took place and possibly, where the beginning of the end of performance appraisals in Japan took root and spread.

Happy reading, keep an open mind, and may the force of reason be with you.

“If someone is able to show me that what I think or do is not right, I will happily change, for I seek the truth, by which no one was ever truly harmed. “ --- Marcus Aurelius

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