Ho, ho, oh dear
Along with year-end parties and Secret Santa’s, now is typically the time when performance reviews are done. Performance reviews are about comparing an employee’s actual performance against a set of goals or key performance indicators. Ideally, these should be SMARTER or perhaps just SMART – for more on this please check out this article. The benefits of the performance review process are touted as:
- Having a structured and repeatable approach
- Giving employees fair feedback, both positive and negative
- Having set and communicated expectations
- Being motivational
- Assisting with planning the year ahead
And yet, were you to ask anyone involved in performance reviews – whether employee or manager – the response would be lukewarm at best. Most people have had very negative experiences during these reviews.
Why so grumpy?
The reasons for these negative experiences can range from people to institutional issues.
People issues start with employees dreading this annual or semi-annual event, as they do not know what to expect. Often, one singular bad event, or a very recent negative result, overshadows the entire year of good work. The can be further exasperated when a manager favours one employee over others.
The managerial biases can also been seen when one manager is perceived to be more lenient than others. This is because nobody is ever completely unbiased. It requires active training and control for a manager to offset their natural biases, and this training is rare.
A final people issue, is that managers often do comparative appraisals, in other words saying: “You should be more like…”, instead of highlighting skills and traits that are required, independent of other employees.
Institutional issues include the process being time consuming – requiring preparation from both sides, time for the actual appraisal, and then follow-up time as well. This has a secondary impact: because they are so time consuming, performance reviews are done as seldom as possible. Another example of a poor institutional process is when the ratings are pre-set or graded on a curve. Many organisations do this by prescribing the maximum employees that may get top marks, and in extreme cases, the bottom x% will be fired.
And so?
This creates an environment of distrust and resentment. It is the kind of environment where the go-getters get rewarded. While this sounds good, we need to remember that the go-getters are generally lone stars; they are people who stand out, but are not good team players. As this behaviour is what is rewarded, it is then reinforced, creating a culture of backstabbers and cut-throats. Often, as a direct result of this, the team players leave for organisations who value them. It is always important to remember Peter Drucker’s saying: Culture eats strategy for breakfast!
Why?
Here are the reasons why the traditional performance review does not often work as intended:
- It is trying to do too much: improve performance; reward high performers; course-correct poor performers; provide feedback; determine increases, bonuses and promotions; and plot personal growth for individuals.
- They are both a rod and a carrot: “Do well and get a bonus, do poorly and you may be fired.”
What to do instead?
Performance management should be an ongoing conversation, with weekly check-ins. These should be both formal and informal, where employees and their managers work together to improve overall results. So when the time comes to decide on increases or promotions, it comes as no surprise to the employee, and the manager need not justify the decision. In the same vein, if the employee needs to be asked to leave due to poor performance, it should not come as a surprise.
The above approach also means that the employee feels part of the process. The performance appraisal is not just a previously made decision, it can also counteract some of the managers’ inherent biases, as they interact with each employee regularly, getting to know them as individuals. It also shows who the team players are, and creates a positive and supportive environment.
So what about annual bonuses? Perhaps it is better to think of these as a retention bonus; a thank you to employees for their hard work – a carrot only, not a rod.