We tend to manage them differently.
We give them more opportunities.
We don't settle for poor performance from them.
We push them harder to improve their performance.
If we thing they're a good worker coming in,
we manage them in ways that make them better.
And the opposite is also true, if we get somebody in and we think is not so
great, somebody who we don't think cleared the hurdle for hiring by much.
Somebody says bad things about them when they come in.
We don't manage them the same way.
We're more tolerant of poor performance, we don't push them as hard,
maybe we think they're not capable of as much.
We don't give them opportunities to shine,
we don't devote as much attention to them, and they don't perform as well.
So the supervisor is causing the performance differences here.
And we also know there's a lot of biases related to relationships.
We give better scores to people who are more like us.
Will give better scores to people who are more physically attractive, etc.
So the supervisors are not perfect at assessing employees at all,
which is another part of the problem.
So we see a model emerging which, again,
is very different than you might see in contemporary textbooks.
About a third of companies are moving in the direction, or they are already there.
This is US companies anyway.
Toward a model which gets rid of formal appraisals altogether.
The end of the year there's no sit down,
there's no form to fill out, there is no score.
What they've got instead is a model where you and your supervisor
are having conversations frequently, like all the time, about how things are going.
And they are doing this in part because
the model of accountability is just not that important.
That is, holding people accountable for how things performed last year, partly
because they're recognizing the incentive model doesn't work all that well.
Especially in a period that we've been in for
decades now where merit pay increase is pretty small, a couple of percent.
You know how many hoops you going to jump through for
an increase which is not going to be that much different that you would have
gotten anyway, at least in terms of dollar amounts.
And also I think a lot of companies are recognizing that the annual business cycle
doesn't make sense anymore.
They don't have annual business plans that matter,
you can't cascade down to individual goals from those plans and so forth.
That a conversational model is much more flexible and
helps people talk because the conversation's all the time not just
end of the year, about things when they happen, and how to fix them.
Now, it's an interesting bet as to how this is going to play out,
it's a bet the companies are making.
There's a lot of big companies in this, Microsoft, IBM, GE,
that are betting that they can, through organization culture, get managers to
lead these conversations with subordinates, and do them all the time.
In a way that a rule, we used to have at the end of the year, one conversation,
one scale, one assessment, didn't seem to help us.
So it would be interesting to watch how this plays out.
But for a lot of firms, and particularly a lot of leading firms,
they've given up on the performance appraisal model altogether.