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Periodic Performance Reviews Suck
I’ve been working for over three decades. In that time I have seen dozens of different approaches to performance management and most of them suck. In many organizations performance management is not an integrated process with a clear goal, but rather a disconnected set of tasks that often fail to deliver maximum performance. In this post I’m going to focus on one of those tasks, the period performance review. I hope to convince you this approach is evil and to participate in it is like kicking a puppy. Well maybe not quite that evil, but I’m convinced this traditional approach to communicating performance feedback to employees is a bad thing and I hope to convince you to do something different.
A Periodic Performance Review DOES NOT EQUAL Performance Management
I will admit that I have been part of the problem for many years and that I still feel like I need to get much better at this. I have been making progress and I am at least “consciously incompetent” about this topic. This is the kind of false summit problem I had in mind for this blog. I have struggled with this one long enough that I think I have some observations and suggestions that will help my fellow travelers have an easier time. I’m not offering any magic here, but I hope you can do better than I have.
I also realize that there are companies that actually do a good job of performance management and have developed an approach to providing feedback that works. If you work inside one of those organizations, I salute you.
My central thesis is that traditional periodic performance reviews are actually doing more harm than good in most organizations.
What’s Wrong with Periodic Performance Reviews?
So what is wrong with periodic performance reviews? Performance reviews are usually:
Disconnect in time from the behavior they evaluate
Lacking in specifics
Focused on negative exceptions
From a single perspective
Let me step through these one at a time to provide some explanation.
Disconnected in Time
Most performance review processes are performed on a periodic basis. Some are annual, some are quarterly, and some organizations do it even more frequently. Unfortunately what ever period you pick will never align with the need to provide immediate feedback about performance. My position is that feedback about performance, both positive and negative, needs to be as immediate as possible. This is critical because as busy humans, we are easily distracted and our memory for detail is limited. This leads us to the second problem.
Lacking in specifics
Because we often wait months before explicitly communicating with colleagues about performance, our ability to provide specific details is drastically diminished. It is really hard work to document details about performance all year so that you have the raw material you need to write a useful performance review at the end of the year. Very few managers are disciplined enough to do this really well. If they do, they have copious notes on the negative performance, and virtually nothing on the positive.
Human Resource departments have attempted to encourage participation in these performance review processes by making the forms shorter so they are easier and quicker to fill out. I understand HR is just reacting to the plummeting participation rates and late reviews. Some information is better than no information right? I say no, not really. It seems a little backwards to me to essentially make it easier for Managers to provide less specific feedback. That can only lead to less effective performance management.
Again I would argue this has become a CYA process to avoid pay discrimination lawsuits. You know how you keep from getting sued by your employees? Be straight with them and build a culture that is oriented around helping them achieve to their maximum potential. Preparing to destroy them in court is just wrong headed in my view.
Mostly focused on negative exceptions
Most performance review I see are overwhelmingly focused on the negative. They go into great detail on the gaps between a person’s performance and the standards. Most managers realize that they need to also provide positive feedback, but they rarely list enough specifics to portray a balanced view of the individuals overall performance. Almost always there is heavy emphasis on the most recent negative performance observed. What you get is a significantly distorted view of the individual’s performance.
If you give that kind of unbalanced view of someone’s overall periodic performance they get completely demoralized. You have essentially said that they are only as valuable to this organization as the most recent bad thing they have done. That is not a good way to keep and motivate top talent.
It is a sad state of affairs when you sit down with an employee for a periodic performance evaluation and they are genuinely surprised by the feedback. If you have that kind of conversation I guarantee that the individual will not remember 10% of the feedback you provided. They will be too focused on trying to determine why you don’t like them, don’t understand them; or a myriad of other thoughts about your intent, rather than learning what they need to change to improve.
Negative surprises breed distrust and resentment. It is certainly possible that an individual does not know they are performing badly (that’s an issue I’ll address later) but waiting until the end of a period to tell someone they are not performing well is to knowingly allow them to perform poorly. If they truly didn’t know, and you tell them that you knew but didn’t tell them about it, you create resentment.
Even positive surprises are a bad thing in my view. They represent a missed opportunity to motivate an individual all the way along. It is also much easier for someone to hear negative feedback from a manager who is giving them a steady diet of positive feedback.
From a Single Perspective
Most periodic performance review processes are set up so that a Manager reviews a subordinate direct report. Clearly all sorts of biases and issues can be introduced when you only use one data point for anything. The Manager has unique insight that no one else can have, but they also have blind spots that need to be explored to provide the best feedback.
Some organizations add a “self evaluation” to the mix to attempt to capture the individual’s own perspective. This is a great idea because it brings a different perspective into the mix, but who is this for? The individual already knows how they think they have performed. Asking them to document it is clearly a CYA attempt. Is this a negotiation over their performance where they are trying to get some topics included in the review to balance the story? Or are we just asking the individual to do part of the Manager’s job? It is almost like a dissenting opinion on the Supreme Court. Is self evaluation just a mechanism to allow the employee to get their own viewpoint “on the record”? I don’t see how this can ever be viewed as positive from the individual’s perspective. It turns into an exercise in self-flagellation and/or bragging. This is an uncomfortable position to put your employee in and it certainly doesn’t give them any insight into how to improve their performance.
Other organizations use a 360 degree review process or some other variant that attempts to provide additional perspectives. These are really well intended and should provide additional insight that would be helpful. Unfortunately, I have never seen it work. First of all, some employees use it as an opportunity to retaliate against a co-worker. Because the review is so disconnected in time, fact checking is almost impossible. This leaves the Manager with a useless and biased data point. Additionally organizations don’t teach their employees how to provide constructive & specific feedback. If we can’t even get managers who are theoretically trained to do a good job at this when it one of their primary responsibilities, then how can we expect anything useful from employees that have another day job?
How Did This Happen?
Somewhere along the way, most organizations lost sight of the goal of performance management and fell into a rut of performing some of the tasks that are the corporate artifacts of the original process i.e. periodic performance reviews.
A periodic performance review has become a CYA process in most organizations. The focus is typically on documenting a conversation that took place between a manager and a direct report. Take a look at almost any performance review form and you will see a signature block at the bottom. The only reason for this is to have documentation that a conversation took place. It implies that there is likely to be a dispute about what was said. This is an indicator of significant trust issues within the organizational culture.
Why would anyone want to argue about what was said during a performance review? Why would our attorneys and human resources professionals feel compelled to require a sign off? I suggest that we are here at this sorry state of affairs because the periodic performance review has been linked directly to a couple of other processes, one of which is compensation management. If you are going to use the periodic performance review process to determine what someone gets paid, they are going to do everything in their power to maximize their compensation. When the grade at the bottom of that page equates directly to their compensation, the employee is going to argue that whatever goes into that performance rating is erroneous and should be more favorable to them.
The other process that is linked to the performance review in most companies is the termination process. Significant gaps in performance are documented in the performance review and can lead directly, or via a “performance improvement process” to termination. Employees understand this and will argue about the information being documented to minimize the risk to themselves. That signature is supposed to help us defend against the wrongful termination lawsuit that comes at the end of that road. This is just one little example of how far off the rails this process is in most organizations.
A process that is supposed to to maximize the employee’s performance has become a fight over a negative outcome. The theory is that if a manager communicates to an employee what they are doing wrong, and they know that it impacts their compensation and position, than the employee will take corrective action and improve their performance. The terrible fact is that sometimes this works and that perpetuates what I believe is a significantly flawed process. When you threaten someone’s security, they tend to respond in a way that they think will keep them safe. It goes back to Maslow’s hierarchy of needs in basic psychology. Unfortunately, this change in behavior comes with unintended consequences. While the employee is focused on how to feel secure, they completely lose sight of how to be successful and accomplish their mission. They have a new mission, get out of the dog house and back to safety. They are not working for their team and the organization any more, they are only focused on themselves. This natural human reaction is exactly the opposite of what their manager hoped to accomplish.
I am sure some of you are thinking about your own experiences when you “hit them with a 2×4” (a bad performance rating), and an employee changed their behavior and you actually got better performance out of them. I have done that myself and achieved a change in behavior that fit the standard better, but at what cost? I’m guessing you have also had the experience of that employee “backsliding” into the same poor performance after the pressure was off. I would argue that telling someone to do something differently with a gun to their head will get a short term result, but they haven’t learned anything, except that they can’t trust you. If we lose trust in the organization, we are doomed.
Before you stop reading and think I’m some kind of “softy” who is squeamish about “hard conversations”, let me assure you I have had plenty of them. I’ve terminated a lot of people in my career and every time I do it, I consider it a failure. I failed to do one or more of the following:
hire the right person for the job in the first place
communicate what performance is expected
create the environment necessary for success (resources, environment, tools, etc.)
coach/teach the person how to maximize their performance
I don’t like failing, so I keep swimming upstream trying to find a better way to do this.
Is There a Better Way?
Performance management is incredible multifaceted; I want to focus on the one component that is so broken it needs immediate attention in most organizations. Back in the beginning of this post, I laid out several things that are wrong with most periodic performance review processes. Let me step through them one at a time and describe some criteria I think are helpful to creating your own improved process.
Continuous Near Real-Time Feedback
Whatever process you put in place to communicate about performance needs to be as real-time as possible. This can be an informal “drive-by” comment like “That looks really good. I like the way you …”, or “It would be better if you…, because the way you are doing it can be a problem when…”. It could be a reply to an email that explains what was good, or bad about the email you received. It could be public recognition of someone’s positive contribution. You get the idea. The bottom line is that you find a way to communicate about performance on a continuous basis as near to real-time as possible.
This takes a lot of time and energy, especially when you are not used to doing it. But this is an absolutely essential activity if you want to get maximum value out of the resources you have invested in. Is there anything more fundamental to a Manager’s job than that? I also believe that the more time you put into providing your people with feedback about their performance the less fire fighting you have to do.
Without specifics an individual has no way to learn about improving their performance. Telling someone that the outcome of their hard work is not acceptable doesn’t give them any information about what to do differently. If you provide specifics about what is wrong, whatever mis-understanding or problem they had will become apparent to both of you, and a solution can be formulated immediately.
This will turn a nagging negative comment it into an observation with help attached. Which would you rather have? Which approach increases trust and strengthens relationships? Even if you are providing positive feedback, the specifics are really important. “Good job…” doesn’t reinforce the specific behavior that you want more of. The individually needs to understand which behavior is leading to the positive feedback so they can keep doing it. Otherwise they might misunderstand and focus on the wrong behavior and not maximize their performance.
Everyone performs less than optimally sometimes. When they do, they need feedback to recognize that fact, plus specific information and coaching to help them improve. It is critical that the feedback ratio positive/negative actually match the individuals performance. This seems like a no-brainer, but many of the performance reviews I have seen are way out of whack. Try counting the number of sentences that are positive vs. those that are negative and see for yourself. Sometimes this is because the negative feedback is very detailed and the positive is very vague. Unfortunately, that doesn’t create the balance I am talking about. Think 90% positive, not 50-50! When you elaborate in great detail about the negative and give the positive vague recognition, you are sending a message that the negative feedback is more important than the positive when actually the exact opposite is true!
Make certain that whatever process you use for feedback is proportional to actual performance. This is hard work for a manager. It means a lot more communication than we are used to giving our employees and it means including a lot more specifics. The payoff is an employee who actually has information they can use to make a change in their behavior. Just as important, they are left with the feeling that they are being treated fairly. They will respect your opinion because it “fits”. If you can get an individual to the point where they know what is wrong, how to fix it, and they are motivated to fix it, you might actually improve their performance. If you give feedback the traditional way employees feel badly, don’t know what to do about it, and may even resent you. It’s highly unlikely that approach will produce better performance.
No mater how you go about providing feedback it should not be a surprise. If you are providing near real-time feedback continuously, most feedback will not be new. If it is new, you won’t be blind-siding them with a big list of things that went wrong weeks or months ago.
Performance standards have to be communicated. This is reaching into the broader performance management topic, but it is relevant here. You can’t hold someone accountable to a standard they don’t know about. It is not only impossible for them to meet, but it creates the appearance that you are making the rules up as you go along and that breeds resentment and distrust. Providing specifics opens the door to a way forward, but making the change is still hard. Taking away the excuse that you don’t know what you want anyway, increases the odds your employee won’t give up and blame you for their poor performance. This keeps their head in the game and you get better performance.
Objective measurements are great for providing clarity of expectations. It is always clear to a salesperson where they stand relative to their quota. Even if an organization’s systems are terrible, the sales people track this number themselves and have no surprises when they are short. Unfortunately, not all positions are as laser focused as sales and often it is very difficult to quantify some job expectations numerically. Objective setting is a whole topic unto itself, so I’ll just stop here and say that as far as communication performance feedback is concerned, you must find a way to be sure the expectation is known to the individual in advance, and that you don’t change the rules without communicating explicitly. If you can’t quantify it, you better talk about what you want a lot and be very consistant.
Of course it is wonderful for anyone to have a pleasant surprise, one where they get positive feedback they didn’t expect, but think about it. That wonderful feeling they get once a year could have been spread out throughout the year and used to motivate them along the way. Which way do you think results in better performance?
Crowd Sourced Feedback
Despite my rant about all the problems with 360 Feedback processes, I do believe the concept is sound. We have to find a way to gather performance feedback from all the stakeholders i.e., managers, co-workers, customers, etc. I think we have a long way to go here, but there are a few things that can help.
In recent years there have been a crop of social performance management, or feedback systems that have come on to the market. Most of these are not limited to the performance review domain, but attempt to change the entire performance management process. I’ve taken one run at implementing this kind of system and I can tell you it is a multifaceted change management project that is not trivial. You are not going to replace your performance review form by dropping one of these tools in place. However, with careful planning I think there is a way forward here that will pay long term dividends for organizations that start experimenting now.
Fundamentally these tools take a crowd sourcing approach to feedback, that is they provide a mechanism for all the stakeholders to provide feedback quickly and easily. They create a social stream that preserves and shares feedback with the whole organization. Negative information remains private to the giver and the receiver only. Several of these tools incorporate a “gameification” approach to encourage participation. This brings a public recognition component into play which can really boost morale. Some of these tools even extend to customers and other external parties by putting a “How’s my Driving…” style link in email signatures and capturing that feedback in the social stream. Most of the tools I have seen also integrate the objective setting and progress tracking into the tool to address some of the problems I have outlined here.
My experience has been that you must approach this as a cultural change process in order to be successful. It takes a long time to develop the trust and cultural norms necessary for this to work. In the beginning you see a lot of tippy-toeing around negative feedback and uneven participation from the teams. This is to be expected since it’s always easier to sit on the sidelines and be a cynic rather than dig in and give it a go. You will need real leadership and long term commitment to get this done.
What Should a Well Intended Leader Do?
Engage your team. Have a discussion about your current process. Is it serving you well? Do you have any of the issues I have outlined here? As with any organization change effort, you have to have a critical mass of influencers on-board and a compelling case for change, or you will spin your wheels and burn political capital at an unsustainable rate.
No matter what, you must craft a process that fits your culture. You will probable want to, and need to, make some cultural changes to make progress, but you can’t stretch the rubber band too far. Engage your team and determine where the energy is. Set some measurable goals that are realistic. Think about things like: productivity, voluntary/involuntary turnover, employee satisfaction, NetPromoter Score, and your primary operational metrics. Set a baseline and measure everything. If your successful and someone asks how you did it, show them!
If this all sounds way too hard or you don’t have the influence within the organization to pull this off, let me suggest the following plan of action you can do by yourself:
Start providing regular feedback to everyone around you in a specific way. This means every day! Small doses are much better than brain dumps.
If you are required to participate in your organization’s formal review process, keep a file with notes about specifics for whatever rating criteria your organization uses. (at least you can make it actionable and more credible)
Give as much of the positive feedback you can in public, and keep the negative stuff private
Balance that feedback proportional to performance (think 90% positive)
Make sure they hear it from you before any formal review
At formal review time, do your best to accurately represent the feedback you have already given informally. (at least you will have balance in your reviews)
Ask for feedback on your own performance (boss, team members, customers, everyone)
If you have direct reports
Communicate your expectations. Make them objective if you can. If not, talk about them a lot and be sure they are clear in your mind before you share them.
Hold weekly 1 on 1 meetings with each of your direct reports with the following agenda:
Update Progress on Objectives
Discuss Next Steps to make progress
Review & Solicit Feedback
You are not going to fix a broken organization with this one process change, but consider this. If your organization needs to go through a significant transformation to survive, how are you going to make that happen if you don’t have a good process for maximizing employee performance? You have to have a way to communicate throughout the organization when you are doing the right things, and when you are doing the wrong things. How else will the organization find its way?