Complex Systems, Complexity, Chaos Theory,Complex Adaptive Systems,Complexity and Strategy,Organisational Change,Self Organisation,Complex Systems and Knowledge Creation,Brain,Mind,Complex Systems Resources,Complexity and Chaos Resources,Organisational Form, Complexity Theory,Consultancy
Paperless but Powerful
the application of complexity theory to the
development of performance appraisal.

Frances Storr, Humberside Training and Enterprise Council.

Introduction

There is growing recognition that the complexity sciences have a significant contribution to make to our understanding of organisations. "In the very recent past subjects of interest to organisational theorist, observer and practitioner alike have begun to be analysed in light of the findings and from the perspective of the complexity sciences" (Matthews, White & Long 1999). Complexity is the study of non linear dynamic systems or complex evolving systems. Some of the key characteristics of such systems are: non linear feedback; emergent order; interconnectivity and phase transition. Non linear feedback means that tiny disturbances can feed back on themselves and cause exponentially divergent behaviour which in turn means that the system is by nature unpredictable. At the same time, due to connectivity in the system, self organisation is an inherent property of complex evolving systems and it is when a system is pushed to phase transition or far from equilibrium that it survives and thrives..
The abstract nature of complexity presents a major challenge to the organisational practitioners. Whilst the theories themselves have been described in greater detail elsewhere (Mittleton-Kelly 1997, Storr 1999, Waldrop 1992) the aim of this paper is to illustrate the application of complexity to the design, implementation and evaluation of an appraisal system.
Applying concepts of complexity requires people to apply an alternative frame of reference and a different set of assumptions to those which most of us have learned over a number of years working in organisations. Humberside Training and Enterprise Council (TEC) has set out a framework for operationalising the concepts of complexity as a way of conveying some the key concepts in a language that is meaningful to members of the organisation.. The framework consists of three organisational design principles: make connections; learn continuously and make processes ongoing, each with a number of sub-headings. The principles are based on various aspects of complexity and act as reference point for everyone in the organisation. They have also had a major impact on the recent development of a 360 degree appraisal system resulting in a highly unusual, if not unique, process of appraisal. These design principles are described below and their links to complexity and the impact on the design of an appraisal system will be explained.

Three Organisational Design Principles

1. Make connections

Everyone can talk to everyone and should
Everyone is responsible
Network extensively
Richness of connectivity is one of the five parameters which must reach a critical point if the system is to operate at the edge of chaos (Stacey 1996). Stacey considers them to be control parameters as they determine the dynamics of the organisation, defining whether it is operating at the edge of chaos or in the stable or unstable zone. To survive and thrive the organisation needs to be highly interconnected and this principle tells all staff that networking both internally and externally is a part of their job. Rich interconnections enable knowledge to flow around the organisation and this facilitates the emergence of strategies and innovations which enable the system to continually adjust its behaviour with reference to its environment. Interconnections also facilitate the exploration of the possibility space and help to create the requisite variety from which effective strategies can emerge. With each new connection new knowledge is created, enabling the system to improve its fitness level.

Implications for Appraisal

The implications of this in terms of appraisal is that the value of 360 degree appraisal becomes immediately obvious. Not only is the appraisal process based on an assumption that no one person can know the full story of how well an individual is performing it also emphasises the significance of interconnections. This is reinforced by the fact the appraisal is done face to face as far as possible so appraisal becomes a conversation. The emphasis then shifts away from an evaluation of an individual and towards the development of connections and effective relationships. Many appraisees choose to carry out this conversation with their appraisers as a group. This further enhances interconnections as appraisers come together with other appraisers they may not normally meet and through the conversation they become more aware of each others roles and perspectives, sometimes even surfacing and solving organisational problems.

2.Learn continuously

Love mistakes to death
Respond to the environment
Learn by doing
A key feature of a complex adaptive system is its capacity for both single loop learning and double loop learning (Stacey 1996) In other words it can adapt its behaviour to respond to its environment and it can also change its schema or the rules by which it operates. This design principle communicates the importance of learning to all members of the organisation and it is central to building the organisations capacity to deal with the next unknown. It communicates the importance of responding to the environment, on the assumption that we exist in a co-evolving and rapidly deforming landscape.
This is similar to "Keep moving", which Beinhocker (1999) describes as one of the three vital elements for organisations finding high peaks in fitness landscapes. "Stasis is death. If you are not constantly exploring, you'll never find new peaks". Collins and Porras (1994) describe how companies such as Proctor and Gamble, Merck and Hewlett-Packard, which have remained successful for many years, create a culture of restlessness, discomfort with the status quo and constant striving for improvement.
The principle of "learn continuously" is reinforced in a number of ways. For example in analysing mistakes the emphasis is not on who is to blame but on what can we learn and the only piece of paper which is filled in by every member of staff and read by the Managing Director is one which asks people to reflect on what they have learned that month.

Implications for Appraisal

In their introduction to 360 degree appraisal TEC employees are told clearly that the purpose of appraisal is learning not measurement. Specifically the purpose is to improve performance and to learn and grow, and these two are seen as interrelated. This is different to the way in which many appraisal systems are designed. For example Dulewicz and Fletcher (1989) describe the main purposes of appraisal as: performance review; work planning; basis for compensation and benefits; identification of training and development needs; transfer and promotion potential; identification of long term potential; succession and career planning. Appraisals are often used for purposes which, despite appearances, are intended to gain more knowledge of the individual, impose expectations on them and thus more effectively control them. (Townely 1995). Thus, most appraisal systems still place the power in the hands of the manager who makes judgements about the behaviour and performance of their team members and allocates a rating as a measure of that behaviour. A central idea of complexity theories is that the survival of a system is based on learning, on developing strategies to survive in a changing environment and on influencing that environment. In organisations this can only be achieved by systems which acknowledge the essential dynamism of behaviour and thus in themselves are focused on the learning process and on involving people who are central to that process.

3.Make processes ongoing

Learning, planning and evaluating are a continuous cycle
Processes and systems are based on:
· our best people (rather than the one or two who will attempt to abuse the system)
· outcomes (rather than inputs or short term outputs)
Structures and systems should follow not lead
Self organising teams and Self responsibility
Many accepted practices in organisation are born out of a frame of reference where the emphasis is on things rather than the relations between things. Plans and Budgets are based on the reductionist principle that the whole is equal to the sum of the parts. They assume that one controls the organisation from the top and many policies and practices in organisations eg appraisal systems, HR policies, work procedures etc are based on controlling the behaviour of individuals. This third design principle works on the assumption that the organisation is a complex evolving system. This means that it is a self organising system and control is dispersed around the organisation even to the extent of strategy being an emergent phenomenon rather than prescribed from the top of the organisation. This principle attempts to reverse the practice of reifying processes such as planning and evaluation. It is the process of planning and evaluation which is important rather than the sophisticated written plan or evaluation report. A central tenet of complexity theories is that the long term future is unknowable and the landscape is continually deforming so planning and evaluation have to be iterative. The most challenging aspect of this principle is that one has to trust others and to trust the system.
Contained within this principle is the idea that the organisation expects you to "do the right thing" (in terms of the organisations values and purpose) and that structures and systems are secondary to that. It also contains the idea that individuals are responsible for themselves rather than a manager being responsible for them.

Implications for Appraisal

This design principle is visible in the appraisal process in a number of ways. Firstly, there are no forms to be filled in. The process is not driven by paperwork. This is consistent with the view that Randall (1984) proposed more than a decade ago, which is that appraisal should be skills led and not forms led. Secondly, and radically, the appraisal is owned by the appraisee. So the appraisee decides who they will ask for feedback on their performance, they decide how to carry out the appraisal and anything which is produced as a result of the appraisal belongs to the appraisee. Support is available from a number of sources including in-house 360 degree appraisal facilitators. So appraisal becomes a process of obtaining feedback to enable one to perform better and to learn. The organisation trusts the individual to be responsible for their own appraisal rather than designing a process which will "pin down" the few people who attempt to circumvent it..

The resultant appraisal system is a face to face, paperless (ie there are no forms) 360 degree appraisal which is owned by the appraisee. This is typically experienced by the appraisee in the following way:
1. They attend an introductory workshop. The emphasis is on: the purpose and principles of this process; the assumptions it is based upon; the freedoms they have as appraisees and the responsibilities; equipping people with the support they need to carry it out and answering all of their questions.
2. The majority then choose a facilitator from the list and arrange to meet with them. Some people organise their 360 without the support of a facilitator.
3. An initial meeting takes place with the facilitator to plan the appraisal. This is strongly guided by what will help the individual to improve their performance and to learn and grow and the ownership stays strongly with the appraisee. Together the appraisee and facilitator decide who to seek feedback from, what feedback to seek and how to collect it.
4. Collecting the feedback. The principle here is "face to face as far as possible". Many individuals have chosen to gather their appraisers in a room together to do this. Others have chosen to see their appraisers on a one to one basis or to do a combination of the two.
5. Pulling together and reflecting on the feedback, usually with the help of the facilitator or team leader
6. Evaluation of the process

Evaluation of the Appraisal Process

A key thread of the evaluation is carried out as a conversation with small groups as this makes space for collaborative learning (Reason 1994) and organisational learning. Individuals often develop their ideas together through the process of evaluation as they reflect on their experience of being an appraiser as well as an appraisee. To date, every individual who has a 360 degree appraisal is involved in such an evaluation meeting. A longer term evaluation strategy is now also being developed and a group of volunteers from across the organisation will be responsible for this. Amongst other things this strategy will look at the impact on performance, how the process evolves over time and the extent to which appraisees truly take ownership of it.
At the time of writing this paper two thirds (120 people) of the organisations population had been through this process for the first time and several have experienced it more than once. In addition to this every team leader had previously been through an upward appraisal, similar in style to the 360. Key themes emerging from the evaluation feedback from these people are:
· People are unanimous in seeing this process as more valid than other appraisals they have experienced because the feedback is coming from several people not just one.
· Whilst many are intimidated by the process beforehand they report that they get a lot of benefit out of it and are more ready to take control of how they will carry it out the next time.
· Many said that they are working more effectively as a result of their 360 and that they have been able to take specific actions based on the feedback they received.
· A large number of appraisees have said that as a result of their 360 they have more insight into the effect that they have on other people.
· Some people said that team communication is better as a result and the benefits were not just confined to the appraisee.
· The view of the author is that the process is increasing the level of openness and honesty within the organisation. There are certainly a number of examples where issues have been confronted which had been allowed to continue for some time previously.
· A minority of people (no more than 5 so far) prefer the old appraisal system where the line manager takes responsibility.
· Not everybody is wholeheartedly enthusiastic about the process. Some people still expect the organisation to take more control and to have an overview of what skills exist in the organisation. A few people have been disappointed in the feedback they received because it did not clearly point to things that they could do better.
Ownership of the process appears to be transferring from the organisation to individuals. For example most people emerge from their first 360 with quite a clear idea of how they want to do it next time. A number of people have already organised their second 360 degree appraisal without prompting from the organisation. It is early days though in terms of judging how many people will do this. In a recent evaluation meeting one appraisee felt that the power of the process is that it really embeds a culture of empowerment and self responsibility. At the same time the process, and the culture, asks a lot of individuals.

Conclusions

This paper has demonstrated how theories of complexity can be applied to the development of an appraisal process. The key features are:
n put the control in the hands of the appraisee and then give them lots of support
n focus on interconnections rather than isolating and measuring
n ask people to participate in something meaningful and then trust them to use their intelligence.
This appraisal system has started with the assumption that behaviour is not a measurable, reducible phenomena but that it takes place within the context of a set of relationships and can only be understood within that context.
One of the implications for theory and practise is that this kind of a process seems unlikely to work in an organisation where there is low trust or where senior members of the organisation are reluctant to relinquish control. A process such as this can only work in a supportive culture where people who are prepared to give negative feedback to the boss are not going to be penalised. The process also requires people to be fairly skilled at giving and receiving feedback.
It might appear that this would only work in an organisation where people were normatively committed but the experience at Humberside TEC suggests that is not necessarily so. Some people who have a more instrumental approach to work were amongst the first to volunteer for this process. This is an area which merits further research. Another area for research is to examine how a process such as this develops and evolves over a number of years and what impact it has on the culture of the organisation as well as on individuals.

References

Beinhocker, E.D. (1999) Robust adaptive strategies. Sloan Management Review, Spring v40 I3 p95
Collins, J.C., Porras, J.I. (1994) Built to last: Successful habits of visionary companies.
Dulewicz, V., Fletcher,C. (1989) The context and dynamics of performance appraisal, in Assessment and Selection in Organisations. John Wiley and sons.
Mathews KM, White MC, Long RG "Why study the complexity sciences in the social sciences" Human Relations April 1999 v52
Mittleton-Kelly, Eve (1997) Organisations as co-evolving complex adaptive systems Paper presented to British Academy of Management annual conference 1997.
Randall G. (1989) Performance Appraisal in "Human Resource Management" Ed C Molander. Chartwell-Bratt
Reason P. (1994) "Participation in Human Inquiry" Sage
Stacey,R.. (1995) The science of complexity. An alternative perspective for strategic change. Strategic Management Journal, 16, 477-495
Stacey, R. (1996) Complexity and Creativity in Organisations. San Francisco: Berret-Koehler
Storr, F (1999) That's another fine mess you've got me into: The Value of Chaos in Organisational Analysis. Paper presented to the British Psychological Society Occupational Psychology Conference, January 1999
Townely B (1994) "Reframing Human resource management. Power, Ethics and the Subject at Work" Sage London
Waldrop M (1992) "Complexity. The emerging science at the edge of order and chaos" Penguin

Paperless but Powerful: the application of complexity theory to the development of performance appraisal.

Frances Storr
Humberside Traiing and Enterprise Council
The Maltings
Silvester Square
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Paperless but Powerful: the application of complexity theory to the development of performance appraisal.

Abstract

There is growing recognition that the complexity sciences have a significant contribution to make to our understanding of organisations (Matthews, White & Long 1999) but the abstract nature of complexity presents a major challenge to practitioners. This paper describes how complexity theories have been applied to the development of an appraisal system resulting in a highly unusual, if not unique, appraisal process: a paperless, 360 degree appraisal which is owned and driven by the appraisee. The aim of this paper is to illustrate the application of complexity to the design, implementation and evaluation of an appraisal system.

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