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Practice, Practice, Practice 159

propelled Motorola to new heights. Over the past four years, Motorola
Inc. beat the S&P 500 by 40 percent, and in their 18 years of implement-
ing Six Sigma, the company has documented over $17 billion in savings.
Additionally, Motorola University has helped companies from Black and
Decker to Toshiba reap dramatic rewards. This is a great lesson in practicing
what you preach!

Beware the Performance Appraisal

One of the favorite devices of human resources departments is the perfor-
mance appraisal. These appraisals have become something of a constitutionally
mandated fact of business management. We believe that these appraisals are,
in truth, harmful to morale and unnecessarily costly for an organization to
administer. Let us explain.
A few years ago, we asked the CEO of a major company what he consid-
ered to be his company’s greatest asset. “My employees,” he answered with-
out hesitation. “I make certain that we hire the best possible people for the
job.” He then went on to explain his hiring policy, from the search process to
the extensive interviewing of a candidate, the personality testing and, finally,
the careful checking of references. It was an impressive list.
He concluded by saying, “My most important job is to make sure that
my company is made up of winners.”
When we asked him further about the company’s performance appraisal
system, he assured us that it, too, was carefully structured. Once a year, every
employee was evaluated in depth by a supervisor, and the CEO was proud
to report that supervisors spent a considerable amount of time and thought
on performance appraisals.
Later on, we had the opportunity to chat with the supervisors and
employees of the company. When we asked about performance appraisals,
everyone, without exception, agreed that (1) performance appraisals were a
waste of time; (2) people dreaded the entire ritual; (3) the process did not
result in behavioral change; and (4) the outcome was influenced by the recent-
ness of performance.
In the course of a year, we talk to hundreds of people, and the reaction to
performance appraisals is universally negative. They are described as one of
the biggest barriers to service and quality improvements. Here’s why. Most
people believe that they are above-average performers. When their appraisal
evaluation rates them as average or below, they feel discouraged and misun-
derstood, and the quality of their work often suffers.