24 February 2007

The Futility of Grades and Performance Reviews

Once or twice a year, supervisors all over the world sit down and solve for X in the following equation:
Y * X = 47

X = the employee performance.
Y = the system they perform within.
47 (or whatever value) = what the employee was able to create within that system.

There are so many things that are wrong with this equation, literally.

For one, the value of 47 is itself subject to massive amount of measurement error. The performance of an individual in a system typically results in indeterminate and hard to measure outcomes.

If Y is the value of the "system" in which the individual performs, this system is constantly changing. Even if the company is static, its environment, its markets, its technology are all changing. Y is a dynamic variable, not a static value.

Nonetheless, supervisors around the world are sitting down right now to solve for X. The scariest thing? Most will actually think that they've found "the" value of X and will never realize that as long as they attribute complementary values to Y, they can justify any value of X that they want.

[And yes, alert readers, this is basically a recap of an argument that Deming repeatedly made onto deaf ears. Apparently, the millions of administrators demanding grades and managers giving performance reviews all understand systems, and variability more than the departed Dr. Deming. Either that or they just don't get it and feel compelled to continue with a system of grading and ranking only slightly less archaic than sinking women in water to determine whether or not they are witches.]


Norman said...


I agree the current approach needs to change. If for no other reason than to increase productivity by freeing everyone up to do something useful.

I've seen, and been subjected to, lots of bad appraisal systems, and so far I've only seen one approach that actually provides value to both the employees and the organization they work for. This approach not only gives the employees continuous, useful feedback, it also ensures they are employed in such a way that they can put their full talents and capability to use.

Although this approach is discussed in workable detail in a number of Elliott Jaques' books, I suggest his most recent, Social Power and the CEO.

ThomasLB said...

Are you saying that there is a newer, more reliable way to tell which women are witches?

Norman said...

Absolutely. Give it a read.