Why Leave Annual Performance Reviews Behind?

Performance reviews have long been known to do more harm than good. I have written on this topic before (link), but I’m not alone: here’s National Public Radio coverage of a new book on the topic.  Why are annual performance reviews still around?

Anyone who has ever been through a routine performance review knows how worthless they can be. Your boss sits across the desk from you, and together you review what went wrong and right during the past year.  You try to play up anything that might reflect positively on your evaluation, hoping there might be a good rating and a raise in it for you.  You also try not to bring up the things you fear might reflect badly on you, and may otherwise feel motivated to play a defensive game, the intensity of which depends almost entirely on the tone of your relationship with your boss.  Your boss may try to make it a useful process, but is probably as uncomfortable as you are.  For some reason regular performance reviews never provide much value, and the reasons why are rooted deeply in human nature.

Why do regular performance reviews seem like such a waste of time? It is rare to walk out of a performance review feeling like something positive has been accomplished (except for any raise you may have been granted).  The supervisor may realize that this meeting is superfluous to your day-to-day interactions, by which they know exactly what and how you’ve done in the past year, or they may feel awkward because they don’t have much interaction with you on a regular basis and really have little understanding of what you do.  Depending on how advanced the organization is, there may be customer-derived metrics from internal or external sources that provide empirical evidence of how you did, but this is as rare as a good understanding of such matters, and meaningful metrics are even more rare.  Finally the meeting concludes with some kind of agreement on how you did, you sign the form acknowledging the review, and maybe you get a raise, or maybe not.  Some managers see formal periodic review as a tool for building a case to discharge an employee who isn’t doing well in their job, has a personality clash with someone in management, or who has been in the wrong place at the wrong time.  There are as many possibilities for such a scenario as there are people, but none of them create much if any positive value for the individuals or organization involved.

Re-design of the periodic evaluation concept has been tried before. In the 1980’s, as Total Quality Management was maturing, some of us were taking hard, analytical looks at how the organizations in which we worked operated.  Common business practices like performance reviews were among the areas getting considerable attention, in part because of the personal pain and sense of lack of value most of us perceived as we went through such systems.  Many revisions of the concept and processes around it were tried in efforts to make it a constructive process.  In some of the most constructive revisions, the performance review was cast as a frank discussion between employee and direct supervision, with a focus on how both (all) individuals involved could improve, and with attention to what benefits the customer and business would see.  Unfortunately the wide variation in supervisor employee relationships, both functionally and personally, sap the value from the process in spite of the best intents of those involved.

W. Edwards Deming revealed the truth: the individual rarely plays a key role in overall results. People in groups behave mostly as they feel they are expected to behave, and their motivations are complex, but it is the systems by which business is done that define the results far more than anything else, and designing and managing the systems is the job of management, not the employee, though they will define the limits and quality of results.  Organizational culture is a tremendously important factor, too, as it has fundamental influences on feelings like sense of ownership that are key elements of people’s motivation.  In the end, the performance evaluation process attempts to make the employee responsible for a great many things outside their control, a fact that may or may not be understood by either the employee or supervisor, but which reduces the value of the performance evaluation to nearly nil.

The lessons of the past are clear when one thinks about them. Deming’s take, in the end, was that giving regular, scheduled raises and only scheduling formal performance-related discussions when a serious problem with the individual worker is suspected is perhaps the best approach.  It saves a lot of time for both workers and supervisors in preparing for such evaluations, but more importantly avoids the pitfalls of misunderstandings, mistakes, and the bad feelings that can result from a poor quality evaluation and the lasting resentment or other bad feelings that can linger thereafter.  Organizational performance is so tied to the feelings of the people involved in the systems of business that a process that creates resentment or bad feelings can greatly reduce the effectiveness of the organization in virtually-unmeasurable ways.  For this reason alone the regular performance evaluation should be retired by practically all business organizations … permanently.

So why are so many of us still subjected to periodic performance reviews on our jobs? While books such as cited in the article linked above give some very good reasons why performance reviews persist, perhaps the most telling is that management savvy and knowledge of human nature, like common sense, aren’t particularly common.  Business schools have never, to my knowledge, taught the “soft” side of business as well as they’ve taught standard practices, quantitative analysis, and financial theory. Culture at every level, local, national, and global, has a huge impact on how business is carried out, but the importance of understanding this critical topic is rarely stressed.   In the end, old style annual performance evaluations are seen as having value to the manager who is insecure and is grasping for any means of feeling in control.  The control provided by formal evaluations is an illusion, unfortunately, and the possibility (probability?) of doing more harm than good is not commonly understood.  Thus, we have the current situation, and performance evaluations continue to be prevalent.

As always, I welcome your comments.  — Tim

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3 Responses to Why Leave Annual Performance Reviews Behind?

  1. Nicely stated, Tim. I had completely forgotten about Deming’s work.

    What do you think would be the best strategy one should take in trying to change their company?

  2. timprosser says:

    Thanks for the comment, Joe.

    Moving away from a tradition of periodic formal performance reviews is tough, like any significant culture change, and is unlikely to prevail unless it is supported from the very top. Successfully moving the organization to a more effective way of handling human resources can require a LOT of selling, education really, of decision makers who can make changes in the system. If you don’t have access to them you might get there through your own, lower level managers, but the chances of success are greatly reduced.

    Once top managers understand the issue they will usually do the right thing, but helping them reach a good understanding can be a daunting task. Good luck if you decide to take this on. Be sure to do your homework and be ready with answers to the inevitable objections and questions.

    Best of luck, and thanks again for the comment. — Tim

  3. Salli Christenson says:

    I heard the NPR piece and found it, and your blog entry, interesting. However, I have not worked in the corporate-type settings to which both refer. In human services organizations, the tendency is for frequent feedback from one’s boss, and supportive criticism and encouragement from bosses and colleagues alike, with no all-important annual review (maybe since raises, performance-based or otherwise, are pretty much unknown), but also, sometimes endless navel-gazing and prolonged dithering about new ideas. And I think that regardless of the type of organization, one’s relationship with one’s boss determines a great deal. I think that’s just human nature, and the way it goes.

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