A More Effective Alternative to Employee Performance Appraisals

Let's face it, employee performance appraisals are typically no fun. But did you know that they are often non-effective, too? If you want to really drive employee performance, consider embracing the Values and System Model.

The employee performance appraisal is an often disliked management task that actually makes performance worse. In Volume 5 of Contractor Success Guide, an article by Wally Hauck explained why traditional performance appraisals are ineffective and often avoided, while also outlining an alternative.

According to Hauck, to make a performance appraisal work, one of the biggest challenges for any manager is to begin thinking differently about performance by embracing the Values and System Model. Setting the values behavior is one of the first steps in that transformation.

Company values and employee behaviors must be in alignment

Research shows that companies seeking to align their operating values and employee behaviors are the most successful, the most fun to work for, and have more loyal customers and employees. Clear values are also the foundation for an effective performance appraisal process.

Regardless of the status of your performance appraisal process, identifying, defining and communicating your organizational values is critical to achieve predictable long-term performance.

A value is a fundamental personal belief. Values provide guidance during difficult situations and allow you to make quick, yet smart decisions. An organization’s priorities are simply a reflection of its values.

There are three key steps to aligning your team with your values.

STEP 1: Three basic values of integrity, respect and customer focus

Dozens of organizations have successfully worked with these three values for the past decade or two. Not one has found the need to expand the list. Why? Because, these three values capture the essence of the important behaviors that people can personally control.

There are dozens of values an organization can decide to embrace. But attempting to embrace too many different values increases the complexity. The correct approach is to clearly define these three basic values first and then provide an opportunity for your people to ask questions, such as “What might be missing?” and “What might be a conflict in their personal lives?” With the proper questioning and listening skills, a leader can begin to help everyone see that these three values can be all-encompassing.

STEP 2: Clear and specific definitions of behavior

Organizations need clear descriptions of values behavior to avoid interpretation, wasted time and wasted resources. Here is an example of values behaviors for each of the three basic values listed in Step 1.


  • Communicate openly, honestly and responsibly
  • Make only agreements you intend to keep
  • Act upon your agreements to the best of your ability
  • When you can’t keep agreements, communicate with those who need to know
  • Admit when a mistake is made and look at the system as a team for a solution


  • Treat others as you would like to be treated
  • Communicate directly, calmly and professionally
  • Listen attentively and congruently without interruption, and paraphrase to confirm understanding
  • Acknowledge the value of different perspectives, and demonstrate it by your actions

Customer Focus

  • Ask clarifying questions to be sure you understand what customers need
  • Make suggestions and recommendations that may better suit their needs
  • Always keep your customer informed (as defined by the customer)
  • Acknowledge requests promptly (as defined by the customer)
  • Anticipate customer “wants”
  • Treat all customers with respect and integrity
  • Continuously explore ways to make more “higher quality” agreements with customers (continuous improvement)

Get your team to review these and agree on one set of specific statements. Have them choose or create at least three or four descriptive statements for each of the three values. Your team can choose statements from the example, modify those listed or create its own statements.

Each statement needs to meet a certain standard criteria for success made up of four questions. Each statement must be answered with an emphatic “yes” to meet the standard:

  • Is it clear to you?
  • Will it be clear to others who did not select it?
  • Is the statement observable behavior (you can experience it)?
  • Can you personally make an agreement to always follow this behavior (although mistakes may be made, they will not be on purpose)?

Each statement that meets the standard criteria can be confidently added to the formal list of values behaviors.

STEP 3: Openly discuss values with employees

The list of statements must be reviewed by the key individuals who were not able to choose them. You can distribute the list to all employees. Give everyone time to absorb the meaning of each statement and provide opinions.

You may want to create a short-term team that can review the suggestions and opinions, and modify the statements as needed to better meet the standard criteria in Step 2. The purpose is to minimize the feeling of compromise.

One of the elements of a poorly performing organization is a conflict between organizational values and personal values. A feeling of compromise on personal values is deadly to performance. By allowing people to evaluate the statements, ask questions and make suggested improvements, you are providing an opportunity for them to naturally align without compromising their personal values and beliefs.

Facilitating these discussions is a challenging responsibility. Very often an outside facilitator is needed to create an environment of fairness and accelerate the entire process.

Wally Hauck, PhD, is a nationally known speaker and facilitator. His company, Optimum Leadership Inc. in Milford, CT, combines training and facilitation expertise with a business background in marketing and sales to help leaders optimize resources, improve services to internal and external customers, and boost employee engagement. Visit www.wallyhauck.com for more information.