I remember cringing as boss after boss gave me glowing performance review after glowing performance review. Yes—I actually cringed at these inane things that were something on the order of 20 pages, usually extremely late (according to someone’s schedule), and wildly inconsistent as they related to my “merit” pay increases. Those observations are merely the ones related to the statistics.
Qualitatively these valueless reviews are claimed to “help their employees grow.” They’re mostly used, of course, as a paper trail in the event an employee must be let go for “performance reasons.”
Based on how I feel about these tools, this blog post might read a bit like a television newscast—28 minutes and 30 seconds of senseless lawsuits, frigid weather, the next disease to encompass the Earth, and a few commercials followed by the 90-second, feel-good story of the Good Samaritan who rescued the abandoned car containing six stray dogs.
They take too much time to write. I once had ten direct reports for whom I was required to write quarterly performance reviews. At an estimated time of 3-4 hours per review, this translated into one full workweek per quarter or 7.7% of my total work hours. I wondered (out loud in fact) whether the company would rather have me focus on increasing our profits by 7.7%. When I asked, the human resources official told me the performance reviews were more important. (No lie.)
They provide almost zero value when it comes to helping the employee improve. I already know what I’m doing well. You don’t need to document it for me. If you must document it, shoot it up the food chain. That way someone important can see it when I’m being considered for a promotion I likely won’t receive because the company has too many people at that level already. So, even though I’m already doing that job, I’m SOL not because my performance review says so but because we haven’t budgeted for that many VP’s. On the other hand, if you’d like to share your observations and opinions (and I stress the words your and opinions) of what I can do better directly with me, just mention that to me immediately when they come to your mind.
They’re usually late or untimely. These reviews usually have a scheduled calendar date (last day of the quarter), frequency (semi-annual), or are a requirement when a task is completed (perhaps a project ending). Has anyone ever gotten one on time? Just asking.
People who provide subjective viewpoints write them. The employee’s boss typically writes the performance review. (If someone else writes it, that’s even worse.) As such, who’s to say the boss’ opinion is correct? If the boss solicited insight from others, who’s to say their opinions were correct? No matter what a company does to make the reviews objective, they never can be as long as they are qualitative assessments. Qualitative, by definition, is subjective.
The improvements cited are often ignored or unenforced. The employee receiving the review knows this is simply his or her boss’ opinion. Most of the time this leads to indifference on the employee’s part to change. Even those who are open-minded and welcoming of the feedback need to work hard to sort through the mess of which feedback in the review is truly valuable and which is worthless.
They don’t help teamwork. The most important team in the company is the “team” between the boss and the subordinate. These performance reviews rarely improve that relationship. There is no upside to the relationship even when the review is stellar. If it was, the relationship was probably already solid. There is, however, a risk of further damaging the relationship with a poor review.
The reviews often don’t align with pay. Those glowing reviews I received that identified me as a top 1% performer translated into some slightly higher merit increase or bonus or whatever. Why would these reviews matter when 10% of the company receives an “A,” 85% receives a “B,” and 5% receives a “C?”
I’ve never seen a performance review system that has truly improved the health of a company. While you might not agree with my assessment, I think it’s at least a fair generalization considering I’ve worked for, consulted to, investigated, or interviewed more than 200 companies during my career. Much of that work was related directly to process, technology, or behavioral improvements for employees.
What can you do?
Simplify the process. Imagine the amount of time that goes into establishing the performance review process, implementing it, and maintaining it on an ongoing basis. What if you did away with it in favor of an open and frequent communication process that was required between the boss and his or her subordinates? How much could you improve the performances as well as the relationships if your employees had these timely discussions?!
Set goals and objectives for the group and individual employee. It’s amazing how someone’s IQ triples the moment you say, “I trust you. Now, get on with it.” Set clearly defined goals for the employees whether they are time-based, amount-based, revenue-based, profit-based, number-of-widgets-produced-based, or whatever. Every employee should understand his or her targets and there should be no confusion regarding how to accomplish them.
Communicate. Communicate. Communicate. As part of your simplified process that includes clearly defined goals, you can more easily communicate regarding where you are related to those goals, what the employee is doing to achieve them, and any guidance the boss needs to provide to help the employee achieve them. You would be amazed how communication—in an open and honest manner—has a way of curing virtually any ills.
Motivate with compensation that is in alignment with those goals. A few key points here. First, I realize not everyone is motivated by money nor should they be. From a company’s standpoint, the most important factor related to compensation is that it’s used to shape the behavior the employer wants (not the employee wants). If the employee’s compensation is in alignment with her goals and her goals are in alignment with the company’s goals, you’re on the best track. If, however, the employee’s compensation is not in alignment with the goals the company set for her or her goals were not properly set forth in accordance with the company’s goals, you’ll elicit undesirable behavior. In the worst case, you will also demotivate the employee. For more information regarding performance-based pay, see Does Your Company Pay for Performance and Compensation: Is it All it’s Cracked Up to Be?
A little update…
I originally wrote this article in March, 2015. Since that time, I’ve been following various companies’ stances on this issue. Interestingly, the likes of IBM (as they mentioned to Fortune) as well as General Electric, Microsoft, Accenture, and Adobe are following this approach. It won’t be long before more companies follow this approach to eliminating performance appraisals.
I always love to hear from you: What is your opinion on eliminating performance reviews?