This is the first in a two-part series on performance reviews, something that many organizations and their employees struggle with. This article looks at performance review failures: The misconceptions that make these reviews so frustrating, and the horror stories borne from these experiences.
A handful of huge companies have done away with traditional annual performance reviews. Accenture, McDonald’s and the company that evangelized Draconian employee evaluations throughout much of the 20th Century, GE, have all adopted new methods of reviewing employee performance. GE rolled out its new performance management strategy at the end of 2016 and still utilizes it today.
Annual performance reviews don’t make sense for multiple reasons. But employee evaluations don’t fail simply due to infrequency. Perverse incentives, prejudices and basic human nature regularly torpedo performance reviews. Here are four things that many organizations get wrong when they conduct performance reviews.
Performance Reviews Are Linked to Incentives For Employees and Managers
“I once worked in an organization where the managers were held accountable for increasing engagement scores,” change management expert Jason Little writes. “Unfortunately the annual bonuses for these managers were tied to making that number go up. What do you think happened? Perhaps even more disturbing is how proud this organization was of its ‘high, and constantly increasing, engagement score.'”
Tying performance to bonuses and raises seems to make sense, at least in theory. The hardest workers get rewarded for their efforts. In practice, that’s not what happens. Katherine Wood, Managing Editor at the HR blog Talent Tribune, writes at OpenView Labs that dangling carrots this way undermines employee reviews because both participants — reviewer and reviewee — focus their attention on what they need to do to earn more money.
This leads to inflated, inaccurate evaluations, which is exactly what Little describes in his experience with engagement scores.
Constructive Criticism Can Feel Antagonistic
“In 2013, psychologists at Kansas State University and other institutions studied how different kinds of people react to negative feedback,” the New Yorker’s Vauhini Vara writes. “They invited more than two hundred employees of a university to rate how they felt about a recent performance evaluation, and asked questions meant to categorize the employees based on how they approach personal goals.
“The researchers figured that people who seek out learning opportunities would react better than those who avoid situations in which they might fail. This was true — but even the avid learners disliked performance reviews, they just disliked them less.”
Meetings in which two or more people sit down to evaluate an employee’s performance can be constructive, but these meetings are absolutely fraught with social nuances. Any formality moves that interaction out of the realm of conversation and into judgement, which can stoke basic social responses that completely undermine an employee’s motivation.
Scheduling this interaction as an annual event amplifies these effects. “Performance reviews feed a pernicious tendency: Don’t address today what you can put off ‘til tomorrow,” attorney Jathan Janove writes at Business Management Daily. “Unfortunately, surprises are stressful, sometimes even when they’re good. When they’re bad, such as delayed performance criticism, the combination of surprise, delay and formality often proves toxic.”
This is where human nature runs head-long into the best-thought-out employee evaluation policies. Failing to deliver feedback, negative or positive, regularly and without ceremony neglects just how dynamic people are.
As Bill Koza, President/CEO at Counterpoint Advisors, says, “People change, the company changes, the market changes, goals change, requirements change, and so on.
Objectives and Objectivity Get Lost in Personal Biases
“In a recent study of almost two hundred and fifty performance reviews, the tech entrepreneur Kieran Snyder found that three-quarters of the women were criticized for their personalities — with words like ‘abrasive’ — while only two of the men were,” the New Yorker’s James Surowiecki writes.
This is the flipside to the people-being-people perspective. The managers responsible for conducting performance reviews are susceptible to the same biases, prejudices and pettiness that all people are. Sometimes, this can manifest as outright sexism, and many women find the deck stacked against them during performance reviews.
“For women trying to earn a living this is hardly earth-shattering social science,” writer Becky Bracken points out at SheKnows. “Heck, I’m only one woman, and I’ve been called strident, aggressive, told I was a bitch, and was asked if I worked as an exotic dancer in the evenings. All comments from male supervisors. And those are the only ones I can remember.”
More subtle prejudices can seep into evaluations, too. Sometimes, a sense of tribalism can influence a hiring decision, and that colors every aspect of the work relationship. “Employers tend to hire people they expect to like,” The Atlantic’s Derek Thompson writes. “They expect to like people who are similar. And they’re more likely to rate people higher if they hired them. As a result, people whose personalities and backgrounds are different from the boss tend to get lower ratings.”
At its core, this is one person judging another’s personality rather than his or her performance. There is a way to avoid this ad hominem approach to performance reviews, which the next article in this series will cover.
Performance Reviews Directly Inform Decisions to Fire People
Though recently re-evaluating, for half a century General Electric implemented and advocated for strict systems for ranking employees. Stanford professor Bob Sutton told Quartz, “[GE was] creating a bigger distribution between the haves and the have nots in their workforce, then firing 10% of them, it just amazed me… [Because when] we looked at every peer reviewed study we could find, in every one when there was a bigger difference between the pay of the people at the bottom and the top there was worse performance.”
This is essentially the same argument against tying pay to performance reviews, only the carrot is swapped out for the stick. A single performance review does not turn up sufficiently reliable intelligence that organizations can identify whom to let go.
This approach is both demoralizing to employees and ineffective. In fact, Lillian Cunningham, the Washington Post reporter who first broke the story about Accenture’s new approach to employee evaluation, writes that the vast majority of managers dislike the way their companies handle performance reviews, and “90 percent of HR leaders say the process doesn’t even yield accurate information.”
“Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting,” Brian Kropp, HR practice leader at CEB, tells Cunningham. “Those aren’t necessarily the employees you need to be the best organization going forward.”