One of the favourite topics of most IT people.
I am also being one of them suffering from this appraisalomnia. As I am suffering from it, I though let me write about it and let others also share it (of course, if somebody reads it).
Goal settings and appraisals is one among several dreadful procedures followed in IT industry and not just IT industry but also employees from several other industries are victim of this. Now, I know, those who always get good ratings are going red with anger, but just read on...
Basically, if you are able to set your specific targets, then since you yourself (of course, along with your boss) set them and you will be rewarded based on them, you are supposed to get motivated and perform better or at your best level. So let's analyze all the fallacies one by one.
Step 1: Setting the goals
You discuss with your boss and then with agreement of both, your boss sets goals for you for the quarter or the half year. Nice and clean you say... Let me ask, have you ever been able to follow your plans as you laid out the first time? It never happens isn't it? Mr. Murphy is one of the most powerful people in the world, and he does strike. If Murphy doesn't strike, wise people know that there are enough tricks in the bag so that your boss can set goals such that even if you outperform all your goals, you won't go much beyond 3 or at the most 4, never 5. One can see the goals and say that whether you can get 5 or not.
Step 2: Self-Assessment
I am skipping some small steps in between. After you have set your goals then end of the quarter or the half-year (well, not exactly end, just before the end, so that your boss can appraise you till the end and the reason why he has to finish appraisals just before the end is these so called fast communication IT companies need 2-3 months to process these ratings finally in order to decide compensation for employees. For a benchmark this time taken for processing is more than what thousand of papers of engineering students are checked and results are declared in Mumbai University. That should give you an idea, how fast these IT companies themselves are.)
Coming back to the main point, here the poor soul must decide what rating he would give for himself, he gives full, the boss will definitely cut it down and if he gives less, boss can say well you yourself given it how can I give you more than that? This is really important step as the comments you write must be tricky enough to justify whatever rating you give to yourself.
I guess you are understanding that things are not as simple and straight forward as they look to be.
Step 3: Ratings by the appraiser (immediate boss)
Question number 1 is are you in the good books of your boss? Well, if you are not, no matter how well you have done, you can't get a good rating. The world is fascinating, no matter what rating your boss gives you, he can always have an argument for it. Sometimes you do good work and still get 3 , he can always say " well, 3 is not a bad rating". The rating can be absolute or relative based on his convenience. This is not the only tricky part, remember you have to prove, that you have done so and so work, now depending on the goal that have been set for you (oops! sorry that have been set BY you) this can be very difficult. Come on, one of my friends have one of his goal set as based on customer appreciation, now just think how many times is customer going to appreciate you, and if he does are you going to keep log, that Mr. So and so called/written/told me that I am doing good work, and even if you keep, who is going to believe you? You can't prove intangible results, can you? but they are often part of the goals.
There are more steps, but this post is already getting too long, and anyways next steps are mostly formalities so leave it here.
Now, there are two final ticks in this trade called "Curve Fitting" and "Rationalization or Normalization" to ensure that your ratings can be scaled down even if they first look good. Curve fitting is like relative grading, so if there is some superperformer in the group and even if you do magnificent work but not as good as him, you can't get 5. All team members must be fit on the curve from 3 to 5, so if you have excellent team, all of them performing very well, don't be hopeful of good ratings. The other trick is that even if you have got 4 and on the center level depending upon the distribution of ratings, at center level your rating can be reduced (unfortunately here, it's not your boss' fault, so you can't blame him) so that compensation can be distributed well (don't ask me what does distributing well means, meaning changes accordingly)
I remember one of very senior members argued on my comments on goal setting that; so many people getting rating of 4 (that means performing better than 100%) , isn't it good? (Well, first thing, if that is the scenario, our company must be super-effcient and benchmark for productivity, but it, in fact scores less in productivity compared to some of the similar companies. So, there must be something terribly wrong with the system, isn't it. It shows that we are super-efficient, but reality is something else)
Conclusion: Percentage of people getting demotivated exceeds many times the people who get motivated. Hence the system results in exactly opposite behaviour to what it supposed to do. so the system sucks and ...........
(Ha ha ha ha, for these two lines, I told you the whole story)