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Jim Caplan, a buyer at Betatronics, was walking to his boss's office feeling sure of himself, sure of his performance, and sure of his worth to his company. It was time for the annual ritual--the performance review with his boss, Joe Galat, the director of purchasing.
After the usual small talk, Joe got down to business: "Jim, let me give you the bad news without any frills. Your performance rating is only 1.5 [on a scale of 1 to 4, with 4 as the maximum rating]. Let's go over the details. Your suppliers have not received any concrete help from you. You are under quota in cost reduction and production is screaming about your parts causing line stoppers. Further...."
Jim was seething with rage: "Now, Joe, just wait a minute. Are your accusations my fault or that of our lousy procurement system? Following the new supply management guidelines, I've faithfully reduced our supplier base to concentrate on our partnership suppliers. But Betatronics issued a policy of no travel. So, instead of helping my suppliers, you've chained me to my desk. The new thinking is that total cost, including the cost of poor quality, was more important than purchase price. I've succeeded. But you |ding' me on obsolete cost-reduction quotas. The lead time issue resulted from the large rush order that sales accepted from our customer for one-week delivery, without checking feasibility with us."
It was Joe's turn to reach a boiling point. "That may be your opinion. I don't make the rules, I administer them. And, in my opinion--which is the only one that counts your performance is sub par. In fact, because you are at the top end of your grade you will receive only a 2 percent merit increase--if one can even call that merit." Jim shot back, "If that's the way you feel and the way you administer this Mickey Mouse system, I quit!"
PERFORMANCE APPRAISALS--CHISELED IN STONE IN CORPORATE AMERICA
An implausible scenario? Not at all. Performance appraisals, such as this one at Betatronics, between boss and subordinate are universal in scope and, almost universally, unsatisfactory in results. Unfortunately, it has been an article of faith, promoted by decades of human resources management (HRM) thinking, that individual differences in skill aptitude, and motivation should be recognized. The boss performance appraisal, conducted on an annual or semiannual basis, is the vehicle to evaluate such individual differences. It, supposedly, gives not only valuable feedback to the employee, but it also determines the employee's merit increases, rewards, bonuses, and promotions in the future. In the aggregate, it also promotes organizational success, according to HRM professionals.
Enter Deming--The Iconoclast
But just as conventional wisdom is being overturned in almost every branch of human affairs, performance appraisals--especially those conducted exclusively by a single boss are being challenged as counterproductive, at best, and causing downright …