Monday, November 21, 2011

Performance Reviews: Need Them?

There's been a lively discussion on a LinkedIn Group about performance reviews (PRs) and the necessity of them. Many talked about how to improve the manager's preparation and delivery of them. No one, but me, talked about how to design a process from the employee's (the receiver's) perspective. If the performance review is expected to create change in employees' behaviors, then the process needs to take into the account the "material" in the process. Likewise, it is a form of communication and the first rule is to know what your audience is expecting.

Currently, employees have low expectations for PRs.  While managers won't admit it, employees know the process is flawed. Even objective criteria like completion of goals are not accurate. Does a manager take time to figure out what obstacles existed to prevent her employee from meeting the objective? Did the company change priorities? Did the company have too many goals allowing inadequate time and resources to be devoted to any one effort?

Even if the objectives were met, it's unlikely that the manager will determine if the employee's effort was substantial and significant, or if the goal was met through corporate momentum, a fluke, or team effort with others providing greater contributions towards the goal. Managers don't have time to do this kind of analysis for everyone and every goal. Subjective criteria on the PR have inherent biases. This also leads to low expectations.

Some managers do a good job on their PRs. Employees are pleased, but they still don't place a lot of worth on them...except when they get in trouble. Once contributor to the LinkedIn forum shared her experience when 7 years of good PRs protected her from her new boss, the Wicked Witch of the West. However, if the experience had been reversed that she had 7 years of bad reviews, her new boss, the Good Witch of the East, would not view her in a positive light either. The Good Witch'd be tainted in her view of the new employee.

What are the expected outcomes from PRs? Changed behavior? If so, look at it from the employee's perspective. Knowing it's flawed and biased, why would I change behavior based on a PR?  I will play the game to get the good review, but it's not a substantial change. Especially if they're tied to euphemistic "merit" increases, I'm not going to radically change my values and behavior to accomplish more or play nicer unless there's a significant benefit to me. 3% isn't going to do it. There have been several studies that show it takes 10-12% of pay to change behaviors. Few corporations can afford this yearly increase, doubling pay every 6-7 years.

So we leaders insist that we have to have PRs to control costs and justify lower wage increases, because we really don't want people to change (or they might expect more). (Radical business cynicism, anyone?)

The important point is to design a system that takes the audience into account. Coens and Jenkins in "Abolishing Performance Appraisals" (2002, Berrett Koehler Publishers) advocate a system where only those that want formal reviews receive them. Everyone else gets feedback as frequently as the manager/supervisor is able to provide it. Some don't need feedback; they're inherently motivated to improve their work. Others will care less. PRs won't make them care more. We need a different tool.

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