A dogma called High performance culture: When there is denial of Judgment - Part 4

Douglas McGregor, the 50s’ management guru, in his article ‘An Uneasy look at performance appraisal’ published in the Harvard Business Review, bemoans the penchant for managers to play god and yet want to fall back on the objectivity façade. He eloquently presents the conflicts all of us face—we want to be judgmental on the one hand and, on the other, want to look fair and objective. The latter makes us construct elaborate frameworks that appear to be objective.

This raises two questions: Is it possible to evaluate human performance objectively? Do frameworks, numbers and metrics make evaluation unbiased and obviate the need for judgment?

Over the years, the quest for objectivity has been obsessive in all attempts to evaluate human performance, be it in business, sports or arts. Its framework applies in cases when there is some degree of predictability and reliability. However, human performance is prone to huge swings and is dependent on context and even chance. It’s apparent and subtle at the same time, thus confusing those who’ve constructed the frameworks of evaluation.

Try finding objectivity among 10 critics who evaluate concerts or sporting events. There will be broad agreement on the extremes of performance, but a consensus on the median will create huge differences. If they were to agree on a ranking or a cut-off grade, there would be huge disagreements. More difficult would be to get the performer in question to agree to the rankings of the critics. Ask Diego Maradona who the best footballer is. Or try settling the debate on Bill Gates and Steve Jobs? Literally impossible!

Liberal arts has, without agonising too much, settled to trust human judgment. The world of film, music, literature, painting, sculpture and architecture have all come to terms with the fact that certain aspects of human expression cannot be reduced to numbers. In order to diminish the zone of subjectivity, they use multiple judges/critics and criteria to arrive at a reasoned judgment. Though this world is no less harsh in making or marring careers of gifted people, they are ready to accept that judgment is inevitable in evaluation.

However, the world of business management has deluded itself in having found the magic objectivity pill and most managers have abdicated judgment in evaluating performance for fear of being accused that they are subjective. This makes them construct a complex web of metrics and dash boards to reassure that they are assessing performance objectively.

If we were to be a fly on the wall, listening to a meeting where a group of senior managers are evaluating the performance of their team, this is what we will hear and see:

•       The meeting will start with the reiteration of the principle that they will arrive at the evaluation strictly on the basis the numbers.

•       Let us say they are using a 5-point rating scale, with 1 indicating outstanding performance and 5 poor. Usually, this rating scale will be aligned to a scoring protocol to measure the KRAs. For example, a score above 90 mapped to a rating of 1, between 81 and 90 mapped to 2 and so on.

•       Now comes the problem. The “name”, which is important to the organization, has ended up with a score of 75 and should be objectively given a rating of 3. What do you think will happen?

•       The pundits of objectivity will want to put this score of 75 into a context. The sponsor of this manager will now argue the case of “the many mitigating and extenuating circumstances”, which impeded the manager during the year. The sponsor will now want us to focus on the tough context, unreasonableness of the targets, insufficiency of resources, performance of the competitors in the market and suggest that we take a “call” this year. The past performance of the manager will be brought in as support for “taking the call”.

•       Let us take another case involving two members of the staff: One in the senior management and the other in the first level of field sales. Both find themselves at a score of 80, a rating of 3. What is your guess? Will there be another “call” taken here to tweak the ratings and move them from 3 to 2? Or will the “framework of objectivity” win and the rating stay at 3? In cultures driven by fairness, both the employees will face a scoring upgrade; in others, the junior will face the “tyranny of objectivity” and stay at 3, while the senior will move ahead of him.

When humans evaluate humans, it is surprising that no matter what the frameworks and metrics are,judgment takes charge. When you are evaluating your own team, you are indirectly evaluating yourselves.

No wonder boards and CEOs struggle to be objective, when they evaluate their direct reports. It takes shocking performance or incompatibility with the CEO, and not performance only, for boards and CEOs to act against senior managers. Are there some jobs where numbers make objectivity sharper and others where even with numbers, fuzziness rules? Of course yes. The more junior a job is the sharper the metrics, the more senior a job, a number of KRAs become fuzzy.

When a job is more sales and production oriented, the sharper are the metrics to measure its output. For  a job that’s input or support oriented, like that of product managers, marketing managers, production planners, risk heads, compliance heads, training heads, the fuzzier are the metrics. Almost half the jobs in any organisation carry fuzzy metrics. So we have to be guarded against thumping the table of objectivity.

Metrics definitely make goals and output expectations clearer. However, since there is more to assessing performance than numbers, as has been illustrated above, the evaluation will eventually be based on judgment. Try using only metrics to decide on the surgeon for an important surgery of your spouse.

A surgeon will not act without the pathology reports, but he will not blindly rely on it too. His clinical assessment, which is anchored on years of finetuned medical judgment, helps him place into context the pathological results and choose a course of action.

Over 15 years, I have observed many managers fooling themselves on being objective, because they use metrics. They are oblivious to how much they load their judgment and make numbers appear the way they want the evaluation to be. When metrics do not lead you to the desired evaluation, the obsession with objectivity makes you change the metrics to justify the evaluation. Over the decades, I have seen senior business leaders do this, thereby creating a culture where the integrity of the system becomes suspect—where we do not know whether the measuring device is reading correctly. If this happens on our car dashboard, will we feel secure?

Performance evaluation is like making LBW decisions in cricket or like calling off-side in soccer. If we accept that judgment is inevitable, we will be careful when we judge, or should we say evaluate, like a good umpire does and not tamper with the data.

My argument is not that numbers and metrics do not help objectivity—they reduce the zone of guessing. But they cannot lead you to the evaluation of human performance. A strong dose of qualitative information needs to be blended with the conclusion to which numbers lead you.

Human judgment is the finetuning button on your evaluation system. It helps amplify certain sounds and dim a few others. This assists in removing the noise or the static, since metrics sometimes oversimplify or distort context.

Whenever the individual performance rating levels of managers do not add up to the organisation’s true level of performance or its market value, you know how objective the performance culture is!

The thoughts and opinions shared here are of the author.