Do You Play Games with Appraisals and Raises?

Does that seem a silly question? It shouldn’t. We play games with employee annual appraisals and salary increases all the time.

For example, a prior company used to play the game of separating the review from the raise. The methodology was to conduct performance reviews on the employee’s hire date anniversary (which was always a fun anniversary to anticipate) and give salary increases during the fiscal first quarter. The reason given for this approach was to disassociate the review from the raise in the employee’s mind.

How successful do you think that was? You’re right. Not at all. Every employee knew the raise they received was based on their most recent appraisal, whether that had occurred in the last week or 11 months prior. There was no disassociation, just confusion.

We create the same confusion in employees with these three other common appraisal/pay raise games. Which do you recognize?

Game 1: Relying on the Appraisal as the Primary Means of Feedback

Hallmarks of the game:

• Let’s be realistic. At least a third of employees never receive a performance appraisal. If the manager cannot be troubled to deliver on a key management requirement on an annual basis, how often do you think the employee reporting to that manager gets any kind of feedback – positive or negative – on their work?
• When they do receive an appraisal, the conversations aren’t “authentic”. As Dan Pink recently put it in a Telegraph article: They are the West's form of kabuki theatre – highly stylized rituals in which people recite predictable lines in a formulaic way and hope the experience ends very quickly.”
• The feedback itself is separated from the events being discussed. Whether the employee performed well or poorly, the feedback given requires both the manager and the employee to vaguely remember an event, accomplishment or incident. Far better is feedback in the moment, or the “puppy approach” as Carol Bartz, CEO of Yahoo, calls it.

Game 2: Ranking Performance

Hallmarks of the game:

• Performance ranking – typically ranking employees on a scale of 1 to 5, with 5 being “outstanding” and 1 being “exit from the organization” – tries to make the arbitrary seem reasonable. Regardless of the details an HR pro tries to put in place, one manager’s understanding of “outstanding” will always be different than another’s.
• More to the point, performance ranking forces the objective on what is inherently subjective. Lance Haun explains well the environment in which this plays out in a recent TLNT article:  “[Reviews] are implemented by managers … who plead to HR, ‘I know who is great, let me just give them raises,’… all for the benefit of executives who think, ‘Nobody should get 5′s because that means they’ll stop wanting to improve!’”
• Most importantly, performance ranking systems do nothing to influence or change a management culture that doesn’t care to give frequent feedback in a way more meaningful than a number.

Game 3: Differentiating based on Pay Increases

Hallmarks of the game:

• Often, the difference is too minimal to matter. John Hollon, also reporting in TLNT, cites the salary increase forecast for 2011 as 2.8% for the average employee and 3.1% for top performers. If this is the primary way you communicate to your top performers that they truly are “more valuable” than the average employee, how much more valuable do you think they will feel?
• Pay increases are no more “promotable” than salary itself. There is no way you can publicly laud employees who continually go above and beyond by promoting how much of an increase they received over their “average” peers.
• Relying on salary increases ties recognition of excellence to a once-a-year event. Don’t your top performers deserve more than a once-a-year pat on the back?

Have you ever played one of these games (unwittingly or otherwise)? What other games do you see being played with employees?

Stay tuned for my next post at the end of the month where I’ll offer ideas for a better way.

Derek Irvine is Vice President of Client Strategy and Consulting for Globoforce, helping global companies set a higher ambition for global strategic employee recognition by leading workshops, strategy meetings and industry sessions around the world. Along with Globoforce CEO, Eric Mosley, Derek recently authored “Winning with a Culture of Recognition: Recognition Strategies at the World’s Most Admired Companies,” available through Amazon.com. Follow Derek on Twitter at @globoforce.

Comments

[Evil HR Ldy]

This is on of the best posts on the nightmare that is performance appraisals.

Another game I hate is when you get your review and your raise on your anniverary date. Therefore, there's tons of money in the budget for people who were hired t the beginning of the year, but if you were hired in December, forget it. Your raise is going to stink and to justify the rotten raise your manager may rate you lower.

[Chuck Csizmar]

Great posting on the games people play with the performance appraisal / reward process. However, I can't say that I agree with the first bullet of your #3 as strongly as I concur with games 1 and 2.

Just scratching my head but there must be something amiss with a survey that shows a 0.3% difference in reward between average and top performers. While I agree that often times the gap is too narrow to properly reward the top folks, how many systems are out there with a distinction of 0.3%? Usually there's a middle ground as well, the massively populated "Above Average".

So while I agree with the point you're making, I would treat the survey you quoted with a bit of suspicion. It doesn't "look" right.

[E James (Jim) Brennan]

More of the ever-popular constantly rediscovered games are here: at "Rewards that Don't" at http://www.worldatwork.org/waw/adimComment?id=35670. There are Basic, Intermediate and even Advanced games to be played.