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Old habits die hard. And in the workplace, one habit that simply refuses to die is the performance evaluation. Organizations stick to them – often doubling down, and increasing the angst, by insisting only a certain percentage of the work force can receive top grades while another slice must be declared poor performers. So when Tamra Chandler, a Seattle-based consultant and author of How Performance Management Is Killing Performance – and What to Do About It began to talk about her book, she agreed the focus had to be on the initial part of her title, since most companies refuse to even consider rethinking the approach. Here is why you're wrong if you're still clinging to traditional performance evaluations – their eight fatal flaws:

A theory without evidence is bad

The belief is that performance evaluation increases morale and engagement, which in turn boosts productivity. But when she first looked into that premise for the Bill and Melinda Gates Foundation she found it flawed. Yes, engagement can increase productivity. But she couldn't find a definite, positive link between performance management and engagement. "A lot of time, performance management was leading to disengagement," she said in the interview.

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Nobody opens up to the person who pokes them in the eye

Supposedly in performance evaluations, an employee candidly discusses his job and performance with the boss. Yeah, right. The employee is usually not ready to listen to or absorb comments on performance at a meeting where he or she is being rated. And the boss is desperately trying to manage expectations . So both are defensive, not open.

Nobody remembers good work

Humans are tilted toward the negative. Weaknesses get top attention in the annual performance meetings – and even if not dominant in the discussion, can still leave the individual feeling bruised. It might be better if the session focused on strengths and the future: "You're great at X and I would like to see more of that."

No man (or woman) is an island

The focus is on the individual, even though systems and organizational challenges can significantly influence performance. Research by Harvard Business Professor Boris Groysberg found star investment analysts lured away by competitors didn't fare as well in the new organization because they had to adjust to a different culture and system.

We are not machines

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The rating systems can never be standardized in a way that prevents bias. "If I rate you, that rating is 60 per cent about me. It's 20 per cent about you," she said in the interview. And while it's relatively easy to tell whether someone is at the high or low end of performance, it's a muddle differentiating individuals in the middle. Despite that, she has seen rating scales that extend to two decimal points, as if the manager can distinguish between a 4.35 performer and a 4.36 performer.

Kindness rules the day

Since managers aren't machines and can't rate people accurately, they lean toward being nice. So scores are often higher than they should be, and used to drive compensation, succession, and other important organizational decisions. "It's garbage in and garbage out. We use bad numbers to drive talent decisions," she says.

Competition is stoked with colleagues

Comparing people against one another hurts efforts to create a collaborative culture. This is particularly true in stacked rankings, where only a certain number of people can be named top (or middle) performers. Business guru Peter Block has written: "It makes no sense to talk of team – and partnership culture, which our marketplace is now demanding – and still hold on to the artifact called performance appraisal."

We are not Pavlov's dogs

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Pay for performance does not automatically deliver improved performance in the way Pavlov's dogs responded to food. Performance management is based on extrinsic motivation but it is intrinsic motivation that is most powerful. "It's better to focus on fairness and equity in rewards and look at other things that will inspire great performance," she said.

What should you do? Obviously pay attention to those fatal flaws. Many companies are starting to move away from the traditional system, substituting other techniques, which her book shares. She suggests three goals: Develop people, reward people, and use your system to drive organizational performance – which contrary to belief, traditional performance management fails to do.

Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online column, Power Points. E-mail Harvey Schachter

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