Joe and Wanda on Management

Last post we talked about one of W. Edwards Deming’s 14 points to transform management listed in his book, Out of the Crisis. This time, we’re going to address one of the Deadly Diseases from the same book.

Deadly Disease #3 – Evaluation of Performance, Merit Rating, or Annual Review – Deming has some harsh words for Annual Reviews and proposes their eradication. Here’s a quote…

“The performance appraisal nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics… it leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.”

Here’s another one…

“Basically, what is wrong is that the performance appraisal or merit rating focuses on the end product, at the end of the stream, not on leadership to help people. This is a way to avoid the problem of people. A manager becomes, in effect, manager of defects.”

Deming offers the following alternate recipe…

• Institute education in leadership; obligations, principles, and methods.
• More careful selection of people in the first place.
• Better training and education after selection.
• Instead of being judges, leaders need to be colleagues, counseling and leading people on a day-to-day basis, learning from and with them… working for the improvement of quality.
• The people that form the system will be subject to the company formula for raises in pay. There should be no ranking within the group.
• Discover who falls outside the system, and reward/address accordingly.
• Hold long interviews with every employee, three or four hours, at least once/yr, not for criticism, but for help and better understanding on the part of everyone.
• Figures on performance should not be used to rank the people that fall within the system, but to assist the leader to accomplish improvements of the system.

Joe Kerr: I don’t believe I’m saying this, but I think I agree with Deming on this one. Get rid of the reviews. I know the go-to people on my team. I’d rather not spend the time retrofitting accomplishments to some review system to justify increases for my team members. Plus, we do all our reviews at the same time, so I haven’t been able to vacation in January for years.

Wanda B. Goode: Deming makes a lot of sense. It is awfully difficult to try to quantify performance. Once you do, it seems that people always find a way to work the system, to the detriment of the intent of the goals. Further, when there is subjectivity in the performance review process, there is often a huge disparity in rating from manager to manager. They can certainly cause some damage. I’m not so sure the people know just what to do to achieve a higher rating either.

I still find myself wrestling with it though. It’s the method we’ve been using to administer “Pay for Performance” for so many years. Maybe I’m like the managers that Deming mentions in his book. Those that say, “They can’t be all bad.” He says the reason we try to hang on is that it’s the system that actually put us where we are today. It must be working then, right? I think it also has to do with the fact that annual reviews are easier too – certainly easier than implementing the 14 points.

I’d like to pilot Deming’s method. I think it would be difficult to convince the big shots to do away with all annual reviews at once. After all, Deming made this recommendation over 20 years ago, and I’m not aware of any corporation that has heeded the advice.

Here’s the blog entry that originally turned us on to Deming and specifically the call to abolish performance reviews.

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