As the performance review season comes to its usually unsatisfactory conclusion for many, we thought we would share our thoughts on why many performance review systems simply do not work.
As anybody who has ever worked in any organization — private or public — knows, one of the primary ways employee effectiveness is judged is the performance review and in our years of experiencing such reviews, we’ve learned that often they are subjective evaluations that measure how comfortable a boss is with an employee, not how much an employee contributes to overall results.
They can be an intimidating tool that make employees too scared to speak their minds, lest their criticism come back to haunt them in their annual evaluations. This leads to performance reviews corrupting the system by getting employees to focus on pleasing the boss, rather than on achieving desired results. Frankly, we have not found convincing evidence that performance reviews are fair, accurate or consistent across managers, or that they improve organizational effectiveness. When the ‘bell curve distribution’ conversations start it becomes clear that the system is broken.
In a self-interested world, where imperfect people are judging other imperfect people, anybody reviewing somebody else’s performance is subjective. It’s why when employees switch bosses, often their evaluation changes as well.
So, what is the answer? In our view, instead of top-down reviews, both boss and subordinate should be held accountable for setting goals and achieving results. The employee should not be solely held accountable for the often arbitrary metrics that the boss creates. Instead, bosses should be taught how to truly lead, and to learn that it’s in their interest to work hard with their team members to get the results the shareholders are counting on.
Instead of the bosses merely handing out A’s, B’s and C’s, they should be working to make sure everyone can earn an A.
Replacing traditional performance evaluations with a system that emphasizes goal-setting and continuous improvement is difficult because the annual review is entrenched and is relatively easy to manage. Furthermore, getting everyone to a level of achievement sounds expensive to those holding the purse strings…
Performance reviews aren’t the only ways to measure effectiveness, to be sure. The link to the overall organization dashboard KPI’s is crucial. Everyone needs to understand how their individual performance impacts the corporate success.
Of course, not every individual will seize the opportunity to collaborate with leaders and figure out ways to improve overall results. If they don’t, there should be ways to get rid of them.
But understand that the traditional performance review makes it nearly impossible to have the kind of trusting relationships in the workplace that make improvements possible. With a more collaborative approach to setting goals and effective measurement, employees have the opportunity to reverse course and say how they can be their best.