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The Performance Review Cycle Continues…And Nothing Ever Changes!

Posted by David Wight in Business Management, Human Resources, Leadership, Organizational Change | 0 comments

How Come We Keep Doing the Same Thing When We Know It Doesn’t Work?

According to a 2010 survey by Sibson Consulting Inc. and WorldatWork, a professional association, one academic review of more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given.

Here we go again, folks. It’s that time of the year.   For companies whose fiscal year corresponds to the calendar year, managers will soon begin writing up their evaluations of employee performance for 2015 and get ready to review them with the person. And despite all the studies and research showing how counter-productive the review process is, and how much both managers and employees feel that the process is a waste of both time and energy, companies continue to hang on to the same old approach.

Measuring Human Performance

The desire to measure human performance probably goes back to the beginning of mankind, and there are two things to consider.   What they did (their behavior or action they took) and the results produced by that behavior. That’s the appeal of most sports. The person (and fans) can see the immediate result from their behavior, and so the result gives them immediate feedback so they can evaluate the effectiveness of their behavior, and make changes to improve those results. . If you miss a fly ball…..you know it right away. You swing at the ball and miss……no one has to tell you or give you feedback about how you missed the ball. The process itself provides you with feedback.

Unfortunately, most jobs in business don’t work that way and neither are most employees operating in such a controlled environment where each behavior and the result is recorded to yield an accurate measure of individual performance over time. Instead we’re more like bowlers except we can’t see the pins because they’re blocked by a sheet, so we throw the ball, and we don’t know how we did unless someone to tell us how many pins we knocked down. At least that would be objective assuming the person could count, but how valuable would that feedback be if instead of being told how many pins you knocked down, you were told that your performance was rated a 2 on a scale of 1 to 5, with 5 being the highest? How would you know what to do differently to get a different result.

Aside from the fact that we lack the capability to accurately evaluating the performance of most employees over any significant length of time, an evaluation or rating of performance does very little help the person understand what they need to do differently to get better.   “I rated your performance on catching fly balls as a 2 because you drop too many of them.” How is that going to help me improve my fielding?

Formal Evaluations Get in the Way of Improved Performance

Reducing someone’s performance over an entire year to a number on a scale of 1-5 is just demeaning. And since there is seldom any objective criteria for what that rating was based on, it’s usually pretty meaningless as feedback  One of the basic rules of giving feedback is to be descriptive…..not evaluative. The reason is simple, the more the feedback is evaluative, the greater the defensiveness of the person, and the less likely the feedback will have a positive impact on their behavior. Besides, it’s seldom accompanied by any feedback about the person’s behavior, and that’s the key to changing the result. Instead of improving the relationship between the employee and their manager, the evaluation just increases the interpersonal distance between the two people, making it that much more difficult for them to work together to get the results that they both typically want.

Managers know this.   All the rating does is emphasize the difference in power between the two people, and that seldom improves a working relationship.   They know that the one-size-fits- all form they’re forced to use when people are doing very different jobs, forces a them to fit a person’s performance into boxes that are simply inappropriate.   They also know that anything other than an above average performance rating will discourage most employees, that the results of the person’s work are difficult to quantify and may not accurately reflect what the person has done, and the rating has the potential for undermining and disrupting their relationship with that employee.

The situation is made even worse when the reviews are put in the employee’s personnel file where other people in management can go and look at them.   This is like expecting managers to give negative (constructive) feedback to a person in public….something we are always telling them NOT TO DO…..with good reason.

The Normal Curve……the Ultimate Contrivance

As a result, left to their own devices, most managers would rate the performance of majority of their employees as “Above Average” as in the distribution of evaluations shown in the 2nd column below.

Rating                                                                   % of Employees Receiving           % with Forced Normal Curve

5 or Exceptional Performance:                                   20%                                                                        10%

4 or Above Average:                                                       30%                                                                        20%

3 or Average:                                                                     30%                                                                        40%

2 or Below Average:                                                       15%                                                                        20%

1 or Poor:                                                                            5%                                                                          10%

Such a distribution is seen as inflated because executives looked at this distribution and asked the question, “If 50% of our employees are performing at an above average level, how come our business results aren’t a lot higher than our competitors? Equally important, this distribution drives up the cost of salary increases that are often tied to the performance ratings.

To correct this companies often impose a forced distribution similar to that in the 3rd column which approximates the “normal” or “bell”. This turns the evaluation process into a political football resulting in arbitrary decisions about who has to get a lower rating made by managers who may not even know the employees whose ratings they’re lowering, much less having actually observed or having any real information about the person’s performance. And then top company executives wonder why both managers and employees dislike the entire process so much, when they actually seldom even use it with their own subordinates.

Sure, that was an easy change for me to make if it was going to make her more comfortable. Separating salary increases for performance evaluations is long overdue. Even if the percentage or dollar amount is relatively insignificant as is often the case, that percentage takes on the symbol of the company’s inability to manage effectively manage its employees. Instead of employees feeling appreciated they become more cynical, and yes, less engaged.

If salary increase were separated from performance ratings, employees would also be willing to set higher more difficult goals…..Goals that are more challenging and heighten their motivation. Instead what you get today are employees setting goals that are as low as they can get away with. And ironically, by doing so, they actually end up lowering their own motivation…..not exactly how the process is supposed to work is it?

What if we want to fire someone for poor performance?

This simply a bogus argument. Ask anyone in HR and here is what they will tell you. Most of the time when a manager wants to fire an employee and goes back and looks at the person’s previous evaluations, they find those evaluations say the person was doing a fine job. Instead of supporting the action the manager wants to take, the performance reviews conflict with it.

Besides…..why would you wait for a performance review to tell an employee that there performance was so bad that were in jeopardy of losing their job? As soon as a manager starts to come to that conclusion they should be putting the person on a Performance Improvement Plan (PIP) which specifies what has to change if the person wants to keep their job. And anyone on a PIP should not be eligible for a salary increase!

So what should we do instead?

For a start, if you really want better performance, managers need to start talking with employees about the future not the past.   The reality is that no one can do anything about the past, but we can do something about the results we try to achieve, and our future behavior or how we going to try to achieve them.

Sure if someone did a great job of managing a project and particularly making sure that the project team adhered to the project deadlines of course the manager would want to bring that up under the heading of “this is something I want to make sure you continue to do in the upcoming year….e.g. You did a great job of making sure that project team A met its deadlines last year, and I want to make sure you do the same thing this year. That’s a whole lot more meaningful than telling a person that “….I evaluated your performance on Project Management as a 5 for last year.”

Maybe there is something that you as the manager would like to see the person start doing or do more of, in the upcoming year.   I once had a manager ask me to stop by her office more often on an informal basis in between our regularly scheduled meetings to update her on projects so she had a better idea of where things stood. I didn’t feel a need to for more direction or guidance from her, and until she said something, but sure, that was an easy change for me to make and what employee wouldn’t do that it was going to their boss more comfortable. I had no idea that she had a need for more communication with me.

Or maybe there’s something that you want the person to stop doing or do less of in the future. What’s preventing you from telling them that and explaining why.

Notice that all of the above instances focus on a person’s behavior, preferably something that you yourself have observed.

But you can basically take the same approach with the results that the person has accomplished.

If you want the same results in a particular area, tell the person that.

If you want more or less of a particular result, tell them that, and discuss the reasons why. Then however it’s critical to discuss what the person may have to do differently to reach those results. If you want very different results, that may be a different kind of discussion where you and the person may need to collaborate and determine what both you and the person will do differently in the future to bring about those results. Otherwise your discussion will be about as valuable to the employee as when the baseball manager tells an outfielder to catch the fly ball more often.

Such a discussion also lays the framework for similar discussions during the manager and the employee during the year. Is the person doing more of what they agreed to do?…..what impact is it having? What if you asked them and they agreed to stop doing something?……how is that working? What have you as the manager observed?

You agreed upon a goal for the employee and what different behaviors might be needed to accomplish that goal. Is it having the desired impact?…….are other changes needed?

Planning, decision-making, problem-solving…..these are all meaningful discussions that are designed to optimize employee performance.

It’s a big change…

But it’s the kind of fundamental change that’s needed if your objective is to get the best possible performance from your employees.   If you don’t believe that…..set up a pilot. Identify a couple of departments where you use the above process parallel to your own Performance Review Process in a number of other control departments.   Interview the participants, both managers and employees before and after and compare the results.   Establish some metrics you can use to measure the overall before and after performance of the pilot and control groups.   Give the managers and employees in both groups the same amount (but different) training in each process. Prove to yourself that this new process will work!

David T. Wight

Performance Leadership Systems 

Dave Wight has spent his entire career promoting positive change to help companies become more competitive and grow.  With a tendency to challenge the status quo and look at things a “little differently,” Dave is a versatile professional, with both breadth and depth.  He has held a variety of executive positions involving performance and talent management, Human Capital consulting and career development. In 2013, he returned to his consulting roots by creating Performance Leadership Systems to work with companies of all sizes to help build their future.

His education includes an undergraduate degree from Cornell’s ILR School, a master’s degree in Industrial Psychology, and post-graduate study in Family Therapy. Dave works with mid-tier companies who want to take the next step in their growth,  family-owned companies struggling to balance family with organizational issues, and larger companies who want to re-invent their Performance Review Process.

 

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