In our office, it’s nearing the end of the fiscal year and that means performance reviews. The annual performance review was completely redesigned this year. In addition, there has been a huge push from above to make sure many more employees averaged close to a “3” in a 1-5 performance scale. Due to these changes, there was a lot of general confusion about what was expected of each employee for their personal review as well as what to expect at one-on-one reviews with supervisors. These changes ultimately had little to no effect on raise decisions; however while speaking with colleagues, it became obvious that the cumulative effect of these changes was a destruction of morale and trust that had nothing to do with money.
Destruction of morale is just a small part of the damage a performance review might have on an organization. An article in the Wall Street Journal discusses several reasons why performance reviews, as they are commonly structured, are damaging and ill-advised. A few of these reasons are detailed below:
1. The boss and subordinate have two different mindsets walking into a review. The boss wants to talk about “skill limitations and relationships,” while the subordinate wants to negotiate a raise. At best, this discussion accomplishes nothing but, the author states, it more likely causes ill-will between the two people that has far reaching problems in day-to-day life.
2. There’s a widely held belief that performance determines pay; however raises are generally determined by the yearly budget and the overall economy and marketplace. The performance review often turns into a thinly-veiled justification for the raise the employee will receive, good or bad.
3. Performance reviews are generally set up to appear “objective” but because a single person is reviewing a number of people, the assessment cannot be free of the bias, motives, and feelings of the reviewer at that moment.
4. This same boss who must review a number of people simultaneously might be comparing very different people with sometimes very different job responsibilities but holding them all to the same criteria. For example, a trait that might be seen as an asset in one instance or by one reviewer could be seen as an impediment in a different situation or by a different reviewer. Similarly, two different employees may have two different ways to get a job done. Although both employees might achieve the same outcome, the boss may agree with one methodology and rate one person higher than the other. Unfortunately, this rating has little to do with actual performance.
5. Reviews in general impede personal development. If employees need help, they’re often afraid to speak to their bosses. Employees may feel that by acknowledging that there is a gap in their ability or knowledge, bosses will see that in a negative light and will decrease their potential raises for the upcoming year. Therefore, people do not grow as employees because they fear the retribution from asking questions.
Performance reviews seem to be a necessary evil but do they have to be? Perhaps there are alternatives to the performance review. The writer of the WSJ article focuses on addressing reviews as a team endeavor between the boss and subordinate and not as an adversarial experience in which both players enter the discussion on the defensive. He defines these meetings as “previews” instead of “reviews” in which both the boss and subordinate assess each other and when there is a problem with their teamwork, both members of the team must discuss and work to fix the problem at hand. The hope is that perhaps these changes lead to a more productive and healthy work environment and less game-playing and morale destruction.
What would you suggest reviews be replaced with?
I have seen performance reviews done very well and very poorly. I do feel they are a necessary “evil” in the fact that a boss and an employee need to be aligned on goals and make sure they are being accomplished in a timely and effective manner.
Three things that I have seen managers do to be more effective with performance reviews are:
1) Don’t wait until the annual review to give feedback. Have at least a once a month one on one to provide feedback and listen to feedback on how things are going. If you wait until that yearly review then the conversation can become some what adversarial if the feedback comes from out of no where.
2) Be willing to receive feedback yourself. Some times managers aren’t getting the most out of their employees because of how they manage them. In your monthly one on one allow your employees to give you feedback on how to better manage them. These conversations can turn a poor performer into a star player on your team just by changing how you manage them.
3) Interview the customers of the employee. Every person has a customer at work, whether it be an internal or external customer. For example the supply chain team’s customer is the sales team because they have to make sure to ship their orders. Instead of just using your own personal opinion on how your employee is performing ask these different customers. The more perspectives you can gather about performance the better you will be able to define their success.
One thing that a manager cannot control but at a company level is the range of the raises that can be given. I have worked at a few large fortune 500 companies where the team’s average raise needs to be 2.5% and I currently work at a small private company where raises are based on merit no matter what other team members contribute. Personally, I am a lot more motivated knowing that my raise will be based on my actual performance and not a political average game that has to be played. Unfortunately, for large publically traded companies this may not be an option.
Great post, Lisa! And I couldn’t agree with Downer more. In my last job, I got “formal” feedback from my boss once in two and a half years. It was very rare that casual feedback was given either. Generally, I had no idea if my performance was excellent or average. In retrospect, I would have really appreciated occasional feedback which I believe would have negated the need for anything formal on an annual basis. If it had occurred that way, I’m sure there would have been less guesswork than an annual review, and thus less question of whether a raise would occur or not.
I’ll never forget my second performance review at my first company. Aside from the pros/cons/etc, the review was supposed to be what determined your raise based off of your completed goals that you set at the beginning of the year. I left the company just before my review. On my last paycheck, I noticed I got the same % raise as “most others” that were willing to discuss their %. In other words, the review was pointless from a raise standpoint, even though that was one of the main goals that was initially explained. Ever since then, I’ve always been looking for more information on how to hold these sometimes necessary “evaluations”, without making them the traditional performance review. Thanks for the post….
I like your recommendations Mike! My question is at what point does a monthly one-on-one meeting with each person you manage simply become unfeasible? For example, my manager currently has over a dozen direct reports and while I think it would be great if he could provide scheduled direct feedback to each and every one of us, he barely has time to attend other day-to-day meetings in the office, let alone an additional 12. I agree that the feedback should be in real-time so that it has more effect and this can be done without meetings, if the manager is diligent.