Performance evaluation: Is this a right tool to motivate employee and increase productivity?

I am quite sure that most of employees in corporations had an experience of Performance Evaluation, whether negative or positive. Nowadays, many corporations still use them in their incentive / reward scheme.  Mainly, it is a motivational tool to increase company productivity, encourage the employees to achieve the set milestones, correct their behavior, or facilitate the general supervision.

These all sound quite standard and acceptable, but there are couple of questions arising in my mind immediately that reveal the contradiction between many recent researches.

- As per recent research by Shawn Achor, “The Happiness Advantange”, it is been discovered that Happiness fuels success. “When we are positive, our brains become more engaged, creative, motivated, energetic, resilient and productive at work”.

How does Performance Evaluation cope with the idea that productivity increases due to  happy employees? If your employee worked hard but didn’t get the expected reward because of the poor evaluation, you definitely do not make him happy and, thus, sharp decrease in his performance and demotivation.

- Do your Reward Mechanisms / Incentive Strategy correlate with the latest Researches/Developments in Occupational Psychology of Behavioral Physics? In one of the RSA videos it was mentioned that monetary rewards do not increase employee productivity for a long-term. Additionally, according to Researches from MIT, University of Chicago and Carnegie Melon Universities the following results were found:

For more mechanical skills, where tasks are simple and straightforward – the monetary reward mechanism works perfectly: Higher Pay = Better Performance

But when task involves more cognitive rudimentary skill, task gets more complicated and requires some conceptual, creative thinking – monetary rewards demotivates: Larger Reward = Poorer Performance.

Thus, money is not a right incentive. The more stronger reward is a purpose-driven professional engagement, where employee realizes importance of his contribution and significance while being part of a team.

As suggested by another research, there are three factors that encourage better performance and personal satisfaction.

1. Autonomy – Desire to be self-directed which is perfect for Engagement

2. Mastery – Urge to et better at something

3. Purpose – that Drives Organisations, to be destructive or to add a real value. (ex. Skype, Apple etc.)

I understand that performance evaluation is a reflection of some expectations that in turn should be clearly communicated and precisely delivered to avoid any misunderstanding and surprises. This creates another dilemma. As suggested by Warren Buffet:

1. Great Leaders hire people and don’t tell them what to do

2. Great Leaders let good people set their own standards and direction

3. Great Leaders delegate almost to the point of abdication.

According to Dr. David Vik, ” The Culture Secret. How to Empower People and Companies no matter what you sell” book, it is vital to create environment that empowers people to function at their best, thus establishing organisational culture. it is not sufficient to hire people and then leave them alone. You need to create specific environment, where they can flourish, be happy at work and feel success.

Culture Building Leaders:

1. Connect rather than withdraw

2. Build “chains of empowerment” not ” chains of command”

3. Concentrate on the success of others

4. Exercise “power with”, not “power over”.

5. Tell people what needs to be done not what to do.

6. Focus on employee strengths

7. Express gratitude

8. Make people feel they matter

9. Emphasize positives even when dealing with negatives

10. Use ‘we’, ‘ours’, and ‘us’

11. Show interest

12. Know names.

I guess, most of these culture building features are directly opposite to the sense of Performance Evaluation. If you are a good leader who focuses on employee strengths, expresses gratitude, concentrates on success of employee, how will make him feel that he matters with your negative/satisfactory Performance Evaluation? It is obvious, that result is the opposite , i.e. complete demotivation of the person.

In this regard, I believe that it is not Performance Evaluations that needs to be used for improvement of organisational behavior or productivity increase, but the leadership style that empowers subordinates through engagement and success.

Below are some tips from Francesca Gino, author of the HBR Press book “Sidetracked”, where she suggests how you can measure employee productivity accurately:

1. Don’t confuse effort with outcomes

2. Make sure your metrics are maningful

3. Examine your incentives

4. Look at the whole picture

  • http://damarque.com/ Gianluigi Cuccureddu SMP

    Great article Fidan.

    And indeed “Happiness fuels success”, many think that success brings hapiness, and of course that might be but to achieve real success you need to be happy in private and business life first.

    Latest Dutch research showed that many people stay at companies due to the personal developments and careers they could go through, not monetary incentives.