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I have this question since my friend told me that if we have frequent appraisal such as 4 months or 6 months once, people will be turned to a money minded. But I am thinking this in another aspect like, people will be getting feedback and boost quickly than one year appraisal. We do not need to increase the salary much. But the token advancement would help them to get some refreshment.

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After being in management for a few years after being a developer for many years (and headed back TO development), I believe that regular, non-formal appraisal is important. Not everyone needs this, but human nature dictates that saving this for once or twice per year is detrimental. Everyone needs regular feedback, not only for motivational purposes, but just to help keep someone from straying too far off the path. No one likes being kept in the dark on the value they're perceived to add (or improvements they need to make).

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+1. Appraisal doesn't equal money. –  sharptooth Dec 17 '10 at 7:29
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They are counterproductive. They are supposed to motivate your people, but in many case it does just the inverse. In some companies I've visited, it's also a way to seek & destroy slackers! I'm against performance reviews or any individual appraisals for the following reasons:

  • Appraisers (bosses of course) are biased. Personal feelings often take over. I can't be objective.
  • When there are multiple appraisers, it's just luck because of the point above.
  • Most employees that does is best and get a negative appraisal will become much less productive than before. It's the spiral.
  • So it changes the target of your employees. It's not company goal anymore, it's their own and individual yearly or quarterly appraisal.
  • This tend to create competition within departments, or worse, within teams!
  • This tend increase individualism a lot. Which is the worse things that could happen to your company

Stephen Covey, author of the 7 Habits and more importantly the The 8th Habit which describe the damage of yearly appraisal, once said

"The so- called boss should become a humble servant and a helper to the employees"

In Software Development, "Peopleware," by Tom DeMarco and Timothy Lister explains the same and propose other ways to motivate employees.

What are the alternatives?

  • Improve the work place instead of saving on it. Avoid open spaces, buy high performance machines, free drinks & foods
  • Encourage innovation. Your people are smarter than you think
  • Don't cut quality. Your people must be proud of what they do
  • Abolish overtime. Except in some very exceptional circonstances such as security breach that must be fixed
  • Prefer open minded people

Your people get feedback constantly already:

  • when a user/customer send them an email saying the product is just amazing
  • when someone ask for their help
  • when someone do his best to help them
  • when they are exited to go to work
  • when they know they are a part of something great
  • when their boss trust them and sincerly think they are the professionals
  • when their coleagues smile at them frequently
  • when CruiseControl says "All build are good"
  • when everyone is happy around them

When they receive bad feedback they know:

  • it's an opportunity to learn
  • they really did their best, they can't please everybody

Encourage efforts, not performances. Creating a top performers is creating 1% of winners and 99% of loosers.

Further reading on the subject: Abolishing Performance Appraisals: Why They Backfire and What to Do Instead

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I agree with this in theory, but not sure about practice. –  Manoj R Dec 17 '10 at 8:01
    
I agree with this - if heavily qualified (political office climate, very large and inflexible structures etc.etc.), but find the generalisation very unhelpful. –  davek Dec 17 '10 at 8:14
    
Hmm...this is quite interesting. I would have never thought appraisals are counterproductive. –  tzup Dec 17 '10 at 9:24
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Formal Performance Evaluation should be separate from bi-weekly informal one-on-one and ad-hoc feedback.

Formal appraisal/performance review should be at most quarterly and this is usually where you are measured by some documented method against your Key Performance Indicators (KPI's) or objectives. The week before this happens, everyone is keen to be hero, either working late, fixing the nastiest/ugliest/hardest bugs, cleaning up mess that nobody wants to touch, etc and generally trying to look good in front of their line manager. When there's potential raises at stake, this will always happen. There are many studies of the best ways to motivate but the role of the individual will always need to be considered. Often the objectives are just used to steer away from bad/unhelpful behaviour and try to aim towards a new skill or responsibility that will be win-win for the company and the employee.

There should also be a regular one-on-one/one-to-one meeting which is an informal chat about what's been happening lately, how you feel about project, interaction with other team members, etc. This is the time to raise things like "I'm finding it hard to get through to Dave" where your line manager or team leader can give some insight into alternative approaches. This is best done for 10 to 15 minutes weekly (new hires) or bi-weekly (everyone else), but not less frequently as issues that come up will not be dealt with and either fester until Perf Eval time (bad) or not get addressed (also bad).

Isolated incidents where you upset/are-upset-by a colleague or do or say something that your team leader considers troublesome should be handled within 24 hours on an ad-hoc basis.

This may sound like a whole load of meetings, but they should be kept short and to-the-point, keeping their value in focus.

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I would say once a year for an in depth cover-all-bases & semi-formal (i.e. documented) appraisal, plus an open-policy door that invites discussion of more immediate issues, whenever they arise.

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