Only when you see Performance Management as rituals, you can understand why we still do them in the same unchanged way. Think Anthropology, stop talking business school dialect.
In recent times people have become more and more disenchanted with performance appraisal, or at least in the form that traditionally is done, such as once a year, perhaps twice. Some companies have announced their death and consulting groups have advocated a semi-scrap of the system [1]
Why are they still there and robust? Because far from doing what it is obvious that they do, they also do other things. The truth? They are rituals. Rituals are hard to change because they are at the core of keeping the glue of cultures and organizations.
In my view, Performance Appraisals have at least five functions, not one:
(1) The official, declared goal oriented function: give feed back, learn, improve/professional development, manage the troupes. Fine.
(2) The (Actionable) Taxonomy functionality: classify people, put them in quadrants and boxes, corporate ‘snakes and ladders’, with the aim to reward, promote, fire. The HR entomology system love this.
(3) An often hidden (‘agency’) function: bringing a sense of belonging, exercising power, asserting authority, being a vehicle for revenge (delayed until the end of the year); these are things Agent-Managers do. Take these away, you get, lame, one-armed managers.
(4) A tribal function: the tribe(s) have here a punctuation of time: same time each year, the before and after, prepare, guidelines, report, It’s this time of the year again. Here we go, Christmas is coming.
(5) A structural function: this is uniformity for all, it cannot be changed, one system and glue, good group cohesion, good for maintaining social order. As such ‘we cannot touch it, it’s global, it’s HQ’ (usually expressed as with some sort of divine or supernatural power)
Only (1), the official, is often declared and talked about. But it is the 5 of them that keep the system alive. If it were only number (1), we would be doing million other things instead.
The only way to seriously think about alternatives is to look at the five ‘functions’ in their totality and see how much each of them is Performance management supporting in your particular culture. The simple elimination or substitution of a ‘type 1’ system for a ‘more refined (1) system’ is naïve.
The clue about Performance Appraisals is in Anthropology, not in Harvard Business School.