Performance Reviews are Counterproductive (pt. 2)

“Traditional performance reviews have passed their sell-by date. Big time. There’s research showing that roughly two-thirds of performance appraisals have either no effect – or a negative effect! – on employee performance.” – Dan Pink

In the previous post we laid out an argument that the performance review process currently used by many businesses is a collection of patched together policies and practices that are completely ineffective and backward. It is a big statement in itself, so let’s take a closer look at it logically and in detail.

Does this process seem familiar in some manner? As a manager of a small group of resources that is part of a larger business, I ask you once or twice a year to perform a self-review of your activity and accomplishments against an ambiguous set of annual goals handed down from Corporate. These goals are so broad they actually have little to do with your day-to-day activity. Even when these goals are narrowed to better fit your department, they are largely out of date not really reflecting the current highest priorities.

You do your best to fit your actual activity and accomplishments into these goal categories, but many are really a stretch. It is difficult to fit your activity as a trainer into the goal of improving margins on core products, but you do the best you can with it. You work through your notes and report some significant accomplishments as well as your performance against the routine portions of your position. It is really a challenge as there are so many, and they are difficult to describe in sufficient detail to others that may not understand the details of your responsibilities. Perhaps you even resort to just using bullet points to facilitate a conversation, hoping that your manager will engage in a conversation with you before moving forward with your review and performance rating.

As your manager, I am now faced with trying to recall and respond to the information you have provided and blend it with my perception of your contributions as well as the 12 to 25 other people on my team. I do the best I can to reflect and recall your contributions and find a way to reconcile with my perceptions. Here is part of my challenge, I do not have a consistent set of metrics that truly reflect your performance in comparison to your peers or the overall goals (assuming that you even perform the same function as they do), and so I am left with my perceptions and intuition.

Given the number of people in my communication circle, you and I only get a chance to talk occasionally and when we do, it is usually about a business issue that requires my assistance to resolve. We rarely have time to talk about what you are working on; after all you are a trusted team member and generally make good decisions. I do tend to talk more with those that have developed some sort of personal relationship or are working on more controversial projects, but you and I talk on occasion.

Now I am required by a misguided policy to rank my employees to fit a performance curve considering only the people of my group. Even if I am a fantastic leader and have led my group to be high performing, I must rate my people into the same curve as any other manager that may or may not be performing to the same level. By making this rating I am going to reward some and penalize others, solely based on my perception. The impact of this action may place you in a category to receive special career development opportunities, extra compensation, greater job security and a host of other benefits, all based on my perception. Conversely, this rating may place you at the bottom of the stack, denying development opportunities, lowering compensation and placing your employment at greater risk. (We will go into more discussion on performance management and performance curves in the next posting, but let’s stay focused on performance review for now.)

I make the case to my management that since my team is meeting and exceeding its goals that I do not have a group of low performers to fit the performance-rating curve. I am informed that I have no choice, my ratings must fit the curve which means that I have to penalize members of my team that I believe are truly meeting expectations or better with a lower performance rating. The only reason their rating is below acceptable is that there are too many rated acceptable or above. It has very little to do with their individual performance.

Now how do you feel when you receive your review and performance rating? If you are favored, you probably acknowledge the review and enjoy the benefits of the perceptions. If you ended up in a category that you do not agree with, how do you feel? Motivated to change or upset with a system that does not recognize your accomplishments? Do you know what kept you from being a top performer or what you could have done better? How do you feel about receiving a lower rating when you can see others on other teams are receiving a high rating and producing far less than you do? Does this raise your level of engagement?

Ever have one manager give you great reviews and the next one gives a poor review only to have the next manager go back to great reviews? There you go. This approach is arbitrary, creates inequality of opportunity, perpetuates mediocrity, and is possibly discriminatory and illegal.

Let’s try this. How about if we do away with performance reviews completely? How about if we setup a system of weekly communication where we briefly discuss what we are going to do this week and then measure ourselves against our progress and potential. How about if we set weekly goals based on current needs and require leadership to do their job and ensure work alignment?

To start with, let’s disconnect the annual or semi-annual process of the performance review from the merit compensation cycle. Let’s make the performance review a proactive every week brief conversation. The manager asks the associate, what are you working on this week? Is there anything you need? The associate asks am I meeting your need? Is there anything I could do better? That is it. It is a conversation that takes a few minutes in the week. It happens every week. The manager is ensuring that the work being performed is aligned with business needs and the associate receives guidance and feedback. Everybody knows exactly where he or she stands all of the time.

Note to associate: there will be no excuse for not knowing how you are performing. If you are unsure where you stand, it is your responsibility to ask.

Note to manager: you need to become comfortable with providing direction and direct feedback. If you are unable to do either of these, then you need to find another role. Also, this is not an excuse to micromanage the associate. Notice the question was what are you working on; it was not instructions on how to accomplish a specific task.

For the record we enter a brief summary of our weekly goals and accomplishments into our performance system and with little effort we have a rolling record of our activity and accomplishments. No need to spend days or weeks at the end of the year trying to recall and structure a picture of our accomplishments. It documents itself. The performance review has actually become a proactive management conversation between associate and their manager.

To wrap-up this segment, there is a lot more we can say about the shortcomings of the previous performance review process, such as are the managers truly qualified to evaluate their team? If a manager is rated as low performing by their manager, how does that reflect on how they rate their team? What if you are stuck with a poor performing manager, will they recognize your contribution, what does that mean for your rating? But now we are moving into the performance management aspect of the performance review cycle.

In the next segment, we will discuss performance management concepts and practices and discover that there is a better measure than the normal distribution curve and actually encourage each person to grow and prosper as they choose.  In the meantime, what are your thoughts on the performance review cycle? Is it productive or not? Please be sure to leave your comments below.

Thanks,

Skip Gilbert