Not exactly a state of mind anyone wants to have. But we don’t need neuroscience to tell us why the annual performance review song-and-dance is so universally reviled. We have our own reasons: the endless paperwork, the evaluation criteria so utterly unrelated to our jobs, and the simplistic and quota-driven ratings used to label the performance of otherwise complex, educated human beings.
And then there’s the buggy software and tedious online tools that make what should be a simple process-sitting down for a cup of coffee to talk about how things are going-downright exasperating. Just ask Pete Juratovic, an Air Force National Guard executive officer who is also the founder of Web design and marketing firm Clikzy Creative in Alexandria, Va. “It’s like a bad homework project,” he says of the “antiquated” software the Guard uses, which requires him to describe his team members’ performance using data-entry fields hardly large enough for a bullet point description. “I call it the Twitter effect. …My job as a leader is to rewrite this so it fits and looks professional within 150 characters?”
What makes this annual rite of corporate kabuki so baffling is that those of us getting and giving reviews aren’t the only ones who hate them. The corporate leaders who force them upon us apparently aren’t big fans, either. In surveys of managers and human resource professionals, leadership advisory firm CEB found that performance reviews, well, get pretty bad reviews themselves.
They’re wildly inaccurate, for one: CEB’s research finds that two-thirds of employees who receive the highest scores in a typical performance management system are not actually the organization’s highest performers. Go figure. The reviews are ineffective, too: Managers told CEB that conventional reviews only generate a 3- to 5-percent improvement in employee performance. They’re also surprisingly inadequate: Just 23 percent of HR folks surveyed by the firm say they’re satisfied with their organizations’ performance evaluations, down from more than 50 percent a decade ago. Eighty-five percent have either made changes in the past year in hopes of improvement or plan to do so in the next year.
Our collective distaste of the process has worsened in recent years as the economy has stagnated, workplace dynamics have changed and a new generation of workers has different expectations. Managers are supervising more people — CEB estimates that over the past five years, managers’ average number of direct reports has nearly doubled, from five to nine — and spending less time interacting with each. Making matters worse, raises are so paltry that the difference between getting a “4” or a “5” on your review might mean little more than being able to take the kids out for pizza every couple of weeks. As a result, that once all-important rating has started to become practically irrelevant.
Meanwhile, in workplaces that have moved from command-and-control hierarchies to ones that value teamwork, collaboration and matrix-style management, performance edicts from on high are a terrible fit. “They’re designed as though they’re Russia in the ‘60s,” says management adviser Marcus Buckingham. The traditional review, which comes entirely from the people who manage you but likely know less about your skills than those who work with you day to day, is “totally out of date.”
That’s especially the case for workers of a younger generation, who have come to expect immediate feedback in nearly every other aspect of their lives. “They put something on Instagram, and in 15 to 20 seconds they’re expecting to know if it’s any good or not,” Buckingham says. “So it’s crazy for them to come into a workplace that’s like, ‘We don’t care about you, and twice a year we’re going to tell you what the company wants.’”
So why then, pray tell, do we still do performance reviews? Why must we continue to have these awkward conversations, in which both sides try to recall what employees accomplished nearly 12 months ago and to make excuses for broaching uncomfortable subjects? Why must we pigeonhole people’s performance into numerical ratings and fill out reams of paperwork or irritating software programs for a process that just leaves everyone deflated?
One answer is we always have. An “imperial rater” was apparently used as far back as the Wei Dynasty in third-century China to make performance evaluations of people at the imperial court. The Navy used performance ratings during the Civil War, says Kevin Murphy, a consultant who has studied performance reviews. “These are large-scale, complex systems for making people unhappy,” he says. “They’re not a new problem.” By the time the 1980s rolled around and General Electric’s Jack Welch fueled the rank-and-yank craze, in which companies rank-ordered employees and culled the bottom 10 percent, it was hard to imagine a world without them.
Another reason is the notion that company lawyers require them. Garry Mathiason, chairman of the global employment law firm Littler Mendelson, says that while it’s preferable to have a system that reviews employee performance, “if there’s grade inflation and not very good communication, then not having them is probably a plus.” While it’s unlikely to happen, “there’s a huge debate in our field about doing away with them.”
After all, the paper trail many companies rely on to support their personnel decisions frequently happens not as part of the regular review process, but after a company has already decided they’d like to manage someone out. “I have had countless situations that go like this,” Mathiason says. “I get a phone call from a client saying an employee’s work is intolerable, and they need to take immediate action. But then I get the evaluation file and it says ‘meets expectations.’ ” As a result, the managers are counseled to put off the decision for six months to a year until a paper trail can be made.
Despite managers’ uneasiness with giving bad reviews, one of the reasons performance evaluations persist is our deep and abiding faith in the value of a meritocracy. Measuring the performance of others is so central to managers’ jobs that doing away with reviews might make supervisors seem superfluous. For many people, says Mary Jenkins, an HR consultant who coauthored the book “Abolishing Performance Appraisals,” “the whole idea of not doing them is almost seen as irresponsible.”
And yet, a few companies have gotten so frustrated that they are taking the leap. CEB found that a small but growing 3 percent of companies in 2012 had dropped traditional annual performance reviews, up from 1 percent in 2011. It’s still a small number, but perhaps offers a sign that some organizations are wising up to what social science research has proven for years: If you’re trying to motivate people, assigning them ratings (especially when forced on a bell curve) isn’t a great idea. Studies have shown over and over again, Jenkins says, that “people simply think they perform better than other people. Unless you rate someone in the highest category, the conversation shifts away from feedback and development to justification.”
That’s exactly why, two years ago, Minneapolis-based Medtronic “completely ditched the old style of performance management,” in the blunt words of Caroline Stockdale, a former chief talent officer for the $16.2 billion medical technology company. Out went the ratings that assigned employees a number between one and five, the forced bell curves that mandated how many ”3s” and “4s” a manager could hand out, and the annual mountain of paperwork to review from the past. “Ratings detract from the conversation,” says Stockdale. “If an employee is sitting there waiting for the number to drop, they’re not engaged in the conversation, at best. At worst, it can actually make them angry and disaffected for a period of up to a year.”
In its place, she instituted a quarterly “performance acceleration” process that focuses entirely on a handful of forward-looking goals, has no numbers or ratings, and includes a one-page summary sheet. So far, fears that the changes would lead to managers not making tough calls about terminating people have gone unfounded-“involuntary turnover,” as Stockdale calls it, has remained steady. In addition, managers’ increased freedom in the performance evaluations has led to double the average merit increases for the company’s truly exceptional performers.
When she describes the new system to her HR peers at other companies, she hears a lot of “I would love to do that, but…” responses. No one seems ready to follow suit. “This is one of the sacred cows. The typical performance review system doesn’t work because you’re demotivating half your population, poking them in the eye with a sharp stick.” And, apparently, dulling sections of their brains for a while, too.
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