Dr. Deming Called for the Elimination of The Annual Performance Appraisal

Guest post by John Hunter, founder of the CuriousCat.com.

In Out of the Crisis, page 101, Dr. Deming states the following as one of the seven deadly diseases:

Evaluation of performance, merit rating, or annual review… The idea of a merit rating is alluring. the sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

Dr. Deming understood the appeal of evaluation of performance. He just judged what actually went on in the world and saw that the appeal was not matched by success in practice. Dr. Deming understood the importance of subjecting theories to evaluation within the system to those theories that were being applied to adopt practices. The most common way of testing beliefs was to use the PDSA cycle to experiment and determine if beliefs were confirmed.

In the introduction to the Team Handbook, Dr. Deming wrote:

The fact is that the system that people work in and the interaction with people may account for 90 or 95 percent of performance.

In such a situation, you then would have to measure most importantly the interaction with others and the system to evaluate someone. Most often there is either no importance placed on interactions, or there is a very minor (especially compared to the importance) placed on interactions.

From page 296 of the Leader’s Handbook:

Someone in the audience asked Dr. Deming: “if we eliminate performance appraisals, as you suggest, what do we do instead?” Dr. Deming’s reply: “Whatever Peter Scholtes says.”

In Total Quality or Performance Appraisal: Choose One, Peter Scholtes says:

Improvement efforts should focus on systems, processes, and methods, not on individual workers. Those efforts that focus on improving the attentiveness, carefulness, speed, etc., of individual workers — without changing the systems, processes, and methods — constitute a low-yield strategy with negligible short-term results

Conventional problem-solving would ask such questions as: Whose area is this? Who is supposed to replace worn gaskets? We don’t ask “why,” we ask “who.” We don’t look for causes in the system, we look for culprits in the work force. Performance appraisal is a “who-based” approach to problem-solving.

This topic is often one people have trouble accepting at first. And it is one many people have strong opinions about. Please share your comments below.

2 thoughts on “Dr. Deming Called for the Elimination of The Annual Performance Appraisal”

  1. I’ve read W. Edwards Deming philosophy off and on for the last 7 years and I wholeheartedly agree with what he says. I wanted to comment on the “Annual performance evaluation” that he mentions.

    I am an active duty Army MAJOR. I’ve been in for 22 years so I’ve seen changes. It’s important for my comment that I set the foundation of what I’m saying.

    I first joined in the early 90s. Back then, an accident, was just that, an accident. For example, I was teaching another soldier how to drive a 2.5 Ton truck. These trucks did not have power steering. In any case, she misjudged a turn and ran into a wall. We took the truck back to the mechanics and explained the situation and their response was “…ok, we’ll fix it…” In today’s Army if the same thing were to happen, it becomes a “Who’s fault is this…?” “Who didn’t teach properly…” Who is the supervisor that failed this soldier” etc. The Army has completely become a “gotcha” mentality, rather than a process, method etc improving system. This translates directly to how people respond to situations based on their personal need for a positive annual evaluation. This leads to deceit, numbers manipulation or information omitted for the sake of looking good in the “boss’” eyes.

    The funny point of this is that Total Quality Management is taught, to some degree, to those who are the “staffers” so to speak, yet, never practiced. It is disheartening that I have been in long enough to experience this negative change. This is actually one of the reasons, that I have decided to retire and start a consulting business of my own. I am not off the ground yet, but that’s what brings me to this page, to expand my understanding of business efficiencies and improvement potential.

    In any case, I look forward to understanding better how I could assist in increasing efficiencies of businesses that seek my assistance..

    1. Stephen E Chalmers

      Deming was condemning performance appraisal as early as 1946! An Army vet and admirer of General Powell’s I opine he said a few words on this subject too.

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