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Take the $ Out of Apprai$als

At all the companies I've worked, I'd lick my chops when appraisal time came around. That's because appraisals always meant one thing: more money.

The appraisers no doubt appreciated my attentiveness as I seemed to hang on their every word. In truth, their pronouncements were going in my left ear, finding the quickest path to my right ear and out into the air.

In truth, while the appraisers' words were circling my brain looking for an outlet, I was busy calculating the impact of the coming salary increase. In the most hopeful imaginings, it might be enough to make me consider myself a highly valued employee. Or perhaps it would be just enough to suggest I was competent in management's eyes. And a stingy pay increase tied to the appraisal might signal cause for worry — about my own competence or about the company's solvency or fairness.

Clogging the appraisal gears

A salary increase — or decrease — is gum and sand to the appraisal machinery, ruining gears and clogging the performance pipeline with matter it's not designed to convey. The promise of a salary increase keeps the eyes of the employee on the glittering gem at the end of the half–hour ritual, instead of on the meat of a good appraisal:

honest praise for work well done
insightful advice as to how strengths may be more usefully applied
a glimpse at company goals and values, and
how a little career tuckpointing might result in a better job or more authority.

You may think that offering a salary increase at the end of the review is natural reinforcement for work well done. But few performances warrant undiluted praise. Usually, at least a few warts are pointed up—and it seems disingenuous to announce a pay increase just minutes later.

Money talk falls on deaf ears

Most HR pros agree that coupling salary increases with appraisals is schizophrenic, apt to confuse carrots and sticks and reinforces little, if anything.

One of them is Rebecca Saunders, author of The Agile Manager's Guide to Effective Performance Appraisals: "Any discussion of salary during the assessment makes the employee deaf to the evaluation," she says.

And Saunders points out yet another concern. Many companies are so disorganized that managers often don't have final approval for the salary increases they intend to give when appraisal time rolls around.

This might seem a pleasant accident, since it automatically decouples salary and appraisal. But Saunders says it's counterproductive: "Managers are not only told not to bring up dollars, but to avoid discussing ratings at all, since salary is often tied to rating numbers." Naturally, that destroys much of the value of the appraisal.

Separating pay and performance

You can easily avoid this common confusion and dilution by acknowledging that performance appraisals and salary reviews are two different events supported by two different systems.

Separate salary discussions and appraisals. When you do, you help keep all eyes on the real prize — better employee performance and a stronger company. And that, eventually, results in more money for all.

About the author: Business owner and HR manager Jeff Olson, a contributing writer to HROne.com, has written nine books on various business topics.

Provided by HROne.com. Copyright © 2001, HROne.com.

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