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Do Performance Reviews Underperform?

Performance reviews are meant to develop people to reach their highest potential, often tied to pay raises and upward mobility. In spite of their common use, they are usually equally despised by employees and managers. Perhaps performance reviews need a performance review.

Performance reviews can help increase employee productivity, and give focus on what to improve and unacceptable behaviors to alter. They should create an openness between employer and employee. However, reviews can create anxiety, break morale, injure teamwork and build animosity. Using a numeric scale across the board with all employees is not an effective way to measure independent success. Ideally, a review can inspire and motivate. If the manager presents the review when it’s due, provides negative feedback kindly and offers the employee clear information for reaching company goals.

Some like Alexander Kjerwulf of Spoing, an Android games maker, regard them as more of an annoyance than anything. He writes in Bloomberg Businessweek that the top three reasons why:

1: Everyone hates them. Managers cite performance reviews as one of their most disliked tasks, and employees dislike and distrust the process, too. Psychological studies show that if you’re in a bad mood (and many people are during their review meetings), you’re not open to criticism and suggestions and are less able to plan for constructive career development.

2: They overemphasize the quantifiable. Albert Einstein said, “Not everything that can be counted counts, and not everything that counts can be counted.” Many of our employees’ most valuable and important contributions to the workplace do not fit into those little check boxes.

3: They become an excuse for not evaluating performance the rest of the year. As in, “Yes, I know Johnson in accounting is lagging a little and seems dissatisfied, but his performance review is coming up in four months—we’ll handle it then.” If you don’t give your employees regular, specific, timely, and relevant feedback (good and bad), you should not be a manager at all.

The Atlantic’s Derek Thompson traces the origin of performance reviews to the formal appraisal system “from China’s Wei Dynasty, around 230 AD, when an Imperial Rater invented a nine-grade system to evaluate members of the official family. History’s first formal review wasn’t much more popular than its recent iterations. “The Imperial Rater seldom rates men according to their merits, but always according to his likes and dislikes,” Chinese philosopher Sin Yu once lamented, futilely.”

Thompson opines that performance reviews reached their pinnacle in the 1980s, when GE’s Jack Welch used the rank-and-yank method to cull the worst-performing 10 percent of his workforce. Thompson might not be aware that ITT boss Harold Geneen represented the true apotheosis of the up-or-out appraisal system during the 1970s –a CEO generation before Welch and that Welch merely adapted the practice from the “Geneen machine.”

Thompson cites one series of studies from the University of Chicago that found that people who are new to a job prefer bosses to act like cheerleaders. When you’re trying to feel out whether a new job “fits,” you want to be told: “You fit!” But experienced workers accept bosses who behave more like hard-knock coaches.

“Why would better workers want more criticism? Maybe because they can take it. Maybe because they don’t appreciate feeling babied. Maybe it’s the openness to evaluation that makes them good in the first place. Or maybe it’s because experts, unlike novices, aren’t looking for positive reinforcement, at all. They’re seeking mastery. Praise is fine at the beginning, the researchers concluded, because it makes beginners feel more committed. But eventually, too much positive feedback starts to feel kinda … boring.

Thompson cites a paper, “How Positive and Negative Feedback Motivate Goal Pursuit,” by Ayelet Fishbach, Tal Eyal and Stacey R. Finkelstein who make “ a fascinating observation about the interplay between feedback and moods. In their words…

When people attribute their mood to the feedback they received, the mood provides progress information and people are more likely to adhere to their goals when they are in a bad mood. However, when people attribute their mood to a goal-unrelated source, the mood signals to them whether to commit to a goal. In addition to general moods, distinct emotions signal the level of attainment on specific goals, such that people infer from their emotional experience (e.g., pride versus happiness) which of their simultaneous goals (e.g., long- versus short-term) they neglected or toward which they made sufficient progress.

The best way to correct this is to involve a diverse group of people in the evaluation process to water down individual bias, as Jeffrey Pfeffer wrote in Bloomberg Businessweek. One-on-one evaluations can feel personal. Groups critiquing groups isn’t just more constructive; but also, it’s a realistic way to evaluate systems and workflow, which are often as important as individual merit in larger organizations. Pfeffor writes:

It’s bad enough that annual evaluations are outdated. It’s problematic that they’re susceptible to a plague of biases. It’s worse that they tend to be pathetic motivators. But the coup de grace is that they’re not even good at identifying the thing they’re meant to identify: performance.

Even when a review strategy is built around clear productivity goals, it isn’t guaranteed that those goals will be communicated properly and in many workplaces, goals remain unclear even as weak and inconsistent review protocols are carried out year after year.


The most stubborn review problems are common across a wide range of business models. Among them: 1) Reviewers pull punches to keep from undermining motivation; 2) reviewers pile on criticism, thus draining motivation; 3) employees resent, dismiss, or take reviews too much to heart; 4) review protocols don’t offer a road map to real performance change; and 5) employees are left with reviews that are too abstract, hard to contextualize, and offered by a single person—one supervisor or manager who may or may not have all the answers.

The Atlantic’s Thompson adds that research from Corporate Executive Board found that two-thirds of employees receiving the highest scores in a typical performance management system “are not actually the organization’s highest performers,” Jena McGregor reported for the Washington Post. Nearly 90 percent of companies surveyed said they have or hope to make changes to their evaluation process in the next year.

It’s worth asking whether a process so flawed is worth saving. Maybe “the evaluation process, itself, deserves a similarly rigorous performance review.”



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