Performance Reviews are Counterproductive

1982 – Dr W. Edwards Deming– The Father of the Quality Evolution
“Evaluation of performance, merit rating, or annual review…the idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.”

2018 – Marcus Buckingham– Thought Leader of the Strengths Revolution
“…the problem with performance reviews is that they are not useful. They don’t tell us anything about the employee, they don’t help the employees get better, and they certainly aren’t giving us the correct information we need to hire, fire, train, and promote our people.”

For over 35 years the approach to performance management has been broken and it is time to fix it. We are often forced to participate in the distasteful performance review process cycle as well as having been victims of its performance crushing results. The system is counterproductive, perpetuates mediocrity, is certainly arbitrary and may be illegal. It’s time to disrupt the status quo with recognition of the problem and move forward with better solutions.

In the next several postings we will explore the failings and impact of the current approach to performance management as well as offer solutions for better results. We will look at the performance review and how it perpetuates mediocrity and limits associate development. We will expose common performance management approaches for their bias and ineffectiveness. Additionally, we will come to see that “pay for performance” is really “pay for perception”. Most importantly, we will develop solutions for a better result and discuss things we can do to bend the system until more enlightened leaders and approaches are put in place.

So why do we do performance management at all? What is its purpose? Let’s be perfectly frank, businesses operate in their own best interest. It is in the businesses’ primary interest to maximize productivity and profitability while keeping expenses manageable. Consequently the actions businesses take are to further their competitiveness and improve their profitability now and in the future. The reason that businesses are involved in performance management at all is that they believe the process will yield a net benefit in line with their primary goals.

In an era of disruptive product introductions and fierce competition, businesses are under great pressure to redesign themselves while managing declining margins and creating new products to meet new market needs. Businesses, especially service-based businesses are looking for a way to sort through their resources (their most controllable expense) and optimize capabilities for their current and future needs. Said more simply, businesses are trying to figure out who is the most productive, who has the ability to meet future business needs and how to manage the remaining resources while remaining profitable.

When we hear that businesses consider their workforce to be their greatest asset or care deeply about associate engagement and associate development, it is because they have determined that these programs are necessary to maintain or enhance their competitive advantage. They are not engaging in these activities out of a deeply altruistic perspective, but as a means to achieve their profitability goals. Businesses are interested in performance management as a means to understand their return on investment in their workforce.

Somewhere along the way in their effort to patch together tools to assess, manage and direct the development of their workforce, business assembled a collection of policies and practices that are completely ineffective and backwards. They de-motivate, are biased to the point of not being able to ensure talent continuity, reward mediocre performance, and truly place the business at risk. It is time to make a change.

In the next segment we will take a closer look at the failings of the performance review process and offer some suggestions for improvements. Have I piqued your interest? I hope so. Let me know your thoughts on this in our comments section below.

Thanks,

Skip Gilbert