Are performance reviews bogus?

I recently witnessed a fresh batch of inflammatory anti-performance reviews flash across my social media feeds, so I thought it’d be a good time to dig in and do some research on the topic, offering a fair balance to proponents and detractors.

The problem? Where are the proponents? Presumably many of you – if not most of you – remain involved in performance reviews. You may even play both of the lead roles, The Reviewer and The Reviewed – and, apparently, you may hate each side equally!

But c’mon. With so many obstacles to our day-to-day work, what’s so bad about performance reviews that only come around once a year?

Well…

Performance reviews dull your brain

The Washington Post‘s Jena McGregor is one of the more incisive and indefatigable critics of performance reviews and status quo. “Study finds that basically every single person hates performance reviews” is one of her headlines. In another piece, dismissing routine reviews as “corporate kabuki,” she cites research that shows that the nature of performance reviews (typically high-stress, high-stakes and somewhat stilted and awkward) brings out defense mechanisms in the brain. Thus, when you’re sitting at the conference table trying to explain why you’re classified as Meets Expectations instead of Exceeds Expectations, your brain activity is narrower than usual.

Individual bias is too prevalent

If your mission was to sell 500 cars and you only sold 18 cars, your poor performance review may be well-deserved (although there could be any number of factors that are impeding your ability to succeed, of course). But for more subjective review categories like “team player,” research shows that individual bias can often skew the results.

“More than two decades ago research done by professor David Schoorman showed that whether or not the supervisor had hired or inherited her employees was a better predictor of evaluation results than actual job performance,” wrote Jeffrey Pfeffer in Businessweek. “…Similarity is an important basis of interpersonal attraction, and so people who are “different” get lower ratings, other things being equal.”

Even HR doesn’t like performance reviews

This statistic seems almost absurd, but one relatively recent (2012) study found that only 2% of HR executives believe annual reviews are beneficial. In my own work history, I’ve had bosses who were rightly annoyed by an arduous and somewhat subject review process, but felt their hands were tied by HR. A popular notion is that “this is just something HR wants.” But maybe that’s a misconception. Clearly, this is an area in which the 98% could stand to take on more of a leadership role in influencing organizational collaboration.

If the annual review is an open forum, what’s the average Wednesday?

Well-meaning executives may encourage direct reports to come to an annual review armed with ideas, requests, questions, complaints, honest feedback, etc. These lines of communication should always be open, though. As a manager, you don’t want problems to fester. Keep open lines of communication.

Our memories fail us

A lot happens in your business in a 12-month span. What someone accomplished (or failed to accomplish) 10 months ago may seem like a fading memory from a bygone era, whereas more recent triumphs and tribulations are top of mind for both boss and employee. An annual review, then, can sometimes wind up being more like a quarterly recap sprinkled with some sepia-tinged bullet points from earlier in the year.

It’s easy to be critical. But who has a better idea?

McGregor references the Minneapolis company Medtronic, which completely disposed of “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.” Instead, Medtronic has moved toward a quarterly process that revolves around goals, but without backward-looking numbers, rankings or ratings. The goal sheet is limited to a single page.

Perhaps that sounds more like a battle of semantics than a battle against the status quo – after all, companies will always be evaluating employees to some extent – but the company feels it’s been able to better reward deserving workers while still holding underperformers accountable.

To counter the individual biases that creep into performance reviews, some companies have built a peer review process into their evaluations (though I’d personally advise against anonymous peer reviews). Another strategy is to think less about evaluating individuals and start evaluating teams; if you are committing to a truly collaborative culture, after all, it follows that at least some portion of the evaluation would be rooted in team goals.

Adobe discarded annual performance reviews in favor of routine communication between managers and employees. “The aim is to give people information when they need it rather than months after teachable moments have passed,” explains Bob Sutton. Compensations increases still occur on an annual basis, but the formal sit-downs to hear whether you scored a 3 or a 4 in “works well with others” are, mercifully, a thing of the past. Similarly, managers and executives are no longer able to punt tough conversations until the next review cycle rolls around.

“I actually wish we had abolished the annual review, and all that came along with it, much sooner,” said Adobe SVP Donna Morris. “We’re seeing more genuine conversations happening at the company; we’re saving 80,000 hours of our managers’ time by removing an archaic process; and our attrition is down year over year.”

Have you shaken up your review process? Are you a traditionalist who can offer a withering counterattack to these critics? We’d love to hear from you!