November 14, 2013

The Backlash Against Performance Reviews

So there is big backlash against employee performance reviews. 

Bloomberg BusinessWeek declares the annual performance review to be "worthless."

The performance review ritual is traced back to the 1930's with Harvard Business School Professor, Elton Mayo, who found that productivity and satisfaction of workers improved when they were measured and paid attention to. This was referred to as the Hawthorne Effect because the study was conducted at the Hawthorne Works of Western Electric outside Chicago.

Later in the 1950's, the Performance Rating Act institutionalized mandated performance reviews for federal workers, 

But studies in the last 2 decades have found employees (42%) dissatisfied with the process and even HR managers (58%) disliking the system. 

Clinical Psychologist, Aubrey Daniels, call the process "sadistic!"

The annual reviews are disliked for many reasons including the process being:

1) Arbitrary, subjective, and personality-driven rather than objective, meaningful, and performance-based.

2) Feedback that is too little and too late, instead of real-time when good or bad performance behavior occurs.  

3) A power tool that managers use in a "culture of domination" as opposed to something that really helps employees improve. 

4) Something used to punish people and build a case against employees to "get rid of you" rather than to reward and recognize them. 

At the same time, this week, the Wall Street Journal reported that Microsoft and other companies are getting rid of forced employee rankings.

The ranking system was developed by General Electric in the 1980's under Jack Welch and has been referred to as ""Stack Rankings," "Forced Rankings" and "Rank and Yank." 

Under this system, employees are ranked on a scale--with a certain percentage of employees (at GE 10% and Microsoft 5%, for example) ranked in the lowest level.  

The lowest ranked employees then are either let go or marginalized as underperformers getting no bonuses, equity awards, or promotions. 

"At least 30% of Fortune 500 companies continue to rank employees along a curve."

Microsoft is dumping the annual quantitative ranking and replacing it with more frequent qualitative evaluations. 

UCLA Professor, Samuel Colbert, says this is long overdue for a yanking at companies and managers' jobs is "not to evaluate," but rather "to make everyone a five."

While this certainly sounds very nice and kumbaya-ish, it also seems to reflect the poor job that managers have done in appraising employees fairly and working with them to give them a genuine chance to learn and improve, before pulling the rating/ranking trigger that can kill employees career prospects. 

A bad evaluation not only marginalizes an employee at their current position, but it limits their ability to find something else.

Perhaps, this is where the qualitative aspect really comes into play in terms of having frank, but honest discussions with employees on what they are doing well and where they can do better, and how they can get the training and experience they need. 

It's really when an employee just doesn't want to improve, pull their weight, and is undermining the mission and the team that performance action needs to be taken. 

I don't think we can ever do without performance reviews, but we can certainly do them better in terms of providing constructive feedback rather than destructive criticism and using this to drive bona-fide continuous improvement as opposed to employee derision. 

This is possible where there are participants willing to listen to a fair critique and work together on getting to the next level professionally and for the good of the organization. ;-)

(Source Photo: here with attribution to Mediocre2010)

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