In 2014 I presented a paper at the Deming Research Summit on the topic of “Understanding and Application of Deming’s System of Profound Knowledge in Healthcare.”
In 2015 I presented a paper on the topic of “Understanding and Misunderstanding Variation in Healthcare.”
This year I’d like to write and present on this topic: “Performance Evaluations – How Is This Still a Thing?”
I’ve outlined my proposal below. I would be interested to know if anyone would be interested to participate in this effort. You can respond by commenting on this blog, or sending me an e-mail at firstname.lastname@example.org.
Performance Evaluations: How Is This Still A Thing?
Proposed research paper for 2016 Deming Research Summit
Dr. Deming saw the annual performance evaluation as one of the systems that would need to be addressed by Western management if they wanted to survive and thrive.
Here are some quotes from his 1986 book Out Of The Crisis:
Chapter 2, Principles For Transformation of Western Management
“12a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective.”
Chapter 3, Diseases and Obstacles
“Many companies in America have systems by which everyone in management or in research receives from his superiors a rating every year. Some government agencies have a similar system. Management by objective leads to the same evil. Management by the numbers likewise. Management by fear would be a better name, someone in Germany suggested. The effect is devastating:
“It 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. 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 problems of people. A manager becomes, in effect, manager of defects. The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise. Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser. Merit rating rewards people that do well in the system. It does not reward attempts to improve the system. Don’t rock the boat. If anyone in top management asks a plant manager what he hopes to accomplish next year, the answer will be an echo of the policy (numerical goal) of the company. (James K. Bakken, Ford Motor Company.) Moreover, a merit rating is meaningless as a predictor of performance, except for someone that falls outside the limits of differences attributable to the system that the people work in. Traditional appraisal systems increase the variability of performance of people. The trouble lies in the implied preciseness of rating schemes. What happens is this. Somebody is rated below average, takes a look at people that are rated above average; naturally wonders why the difference exists. He tries to emulate people above average. The result is impairment of performance.”
Here are some quotes from his 1993 book The New Economics:
Chapter 2, The Heavy Losses
“Differences there will always be between any two people, any two salesmen, etc. The question is, what do the differences mean? Maybe nothing. Some knowledge edge about variation (statistical theory) is required to answer these questions. Ranking is a farce. Apparent performance is actually attributable mostly to the system that the individual works in, not to the individual himself. A simple equation will help to understand the futility of attempts to rank people. Let x be the contribution of some individual, (yx) the effect of the system on his performance. Then suppose that we have some number for his apparent performance, such as eight mistakes during the year, or sales of $8,0(x),000.
“We need x. Unfortunately, there are two unknowns and only one equation. Johnny in the sixth grade knows that no one can solve this equation for x. Yet people that use the merit system think that they are solving it for x. They ignore the other term (yx), which is predominant. There is another factor to take into account, the Pygmalion effect. Rated high at the start, anyone stays high. Rated low at the start, he stays low. Ranking creates competition between people, salesmen, men, teams, divisions. It demoralizes employees. Ranking comes from failure to understand variation from common causes. (See Out of the Crisis, p. 310.) The Red Beads (Ch. 7) will teach us some of the difficulties and errors in ranking people. The so-called merit system introduces conflict between tween people. Emphasis goes to achievement of rank, merit, not on the work. The merit system destroys cooperation. We continue this theme in Chapter 6.”
Purpose of the 2016 paper:
1) To review the arguments that Deming (and others such as Kohn, Scholtes, etc.) have made against the use of the annual evaluation system.
2) To understand the current state of this type of system in today’s organizations by interviewing people in a variety of roles in an organization.
3) Some key questions to explore:
– Are there organizations that do not have a performance evaluation system?
– What has been the experience in organizations that have attempted to dismantle performance evaluation systems?
– For organizations that have performance evaluation systems, what is the purpose? What do they expect the system to do? What actual systems do these systems drive?
– Some specific questions (same questions asked of top management, middle management, front line):
* What do people think the process is getting them?
* Is it pushing strategy?
* Is it promoting cooperation?
* is it pushing performance improvement?
– Other questions?
Ground rules for conducting the research and writing the paper:
1) The authors acknowledge individuals who contributed their time and provided input, but will not attribute quotes to individuals or to organizations.
2) Research will be conducted through phone and in-person interviews with people in various roles in the organization: top management, middle management, front line, human resources, organizational development, clinical, non-clinical, improvement (lean) team support areas.
3) Research will be conducted in organizations that provide healthcare as well as other industries.