Saturday, April 19, 2014

Thoughts on the Performance Review Process

One common tradition in the modern workplace is the annual Performance Review.  There are good reasons for a formal, annual record of how an employee performed, but a lot of companies mess this up.  Since I started working for a living full-time in 1983, I have never once received a performance review that was helpful for either the company or for me, in terms of improving either my value as an employee or developing my career.  There are ways to improve the process, which is the purpose of this post.

A lot of companies have a formal procedure for reviewing work.  This protects the company from accusations of discrimination, and gives employers a sense that a fair system is in place for raises, bonuses, and promotion.  The problems, though, include lack of applicable recognition of specific work, the fact that review only once a year is not a good way to track real performance development, and of course the complete lack of a reasonable way to project career development.  Another big problem seems to be that companies don't want to pay a lot in bonuses and raises, so they push hard against written praise for good work.

Three common types of performance review are:

The Rank & Yank - first made infamous by Jack Welch at GE, Managers are told by executives to rank their staff first to worst, then turn those findings into their bosses.  The company then uses that information to get rid of employees they decide are 'low performers'.  This is cruel, and even Mister Welch later admitted it was a mistake and a bad idea, not least because this kind of process kills morale, and focuses on getting rid of staff rather than rewarding hard work.   But it's still common for companies to use this practice, especially if they worry about having to lay off staff.

The Unanimous Average - this one showed up the most in my career.  Companies make a big deal about reviews but it seems HR hates to actually reward good work.  So, they have come up with a nasty way to cheat success while making it look like they are being fair.   At a former position, the HR people explained to managers that we could rate employees on a scale of 1 to 5, where the middle was meant to reflect average.  The trick is, to get a rating in any work area above average, the employee had to demonstrate that they regularly exceeded the average or expected level of performance all year long in that area.  And just in case an employee did accomplish consistently superior results in their work, the review covered a wide range of areas, with the same requirement applied to each area.  And if an employee was clearly superior in their responsibility, the other area ratings diluted the effect to deny them an overall rating above average.  And just in case an employee managed to be consistently superior in all aspects of their work, HR makes sure managers are told that no less than 75 percent of employees must be ranked in the 'average' category.  Considering that managers are also encouraged to note anyone falling below the average standard, this system exists to push gardes toward the middle, regardless of how well someone actually does in their job.

The Apathetic Boss - People work hard today.  Managers are expected to carve out time to review their employees' peformance according to an often-bureaucratic system, while still devoting full focus on their own work duties.  If the manager has not been keeping track of performance all year long, when the time comes for the annual review the manager is often overwhelmed by the new burden, and many of them simply pull out the previous year's review, make a few changes and turn that in as the new report.

Now, it's easy to complain, but it's important to consider how we can do this properly, to reward good work, to identify opportunities for improvement and to accurately reflect individual accomplishments in a way that is consistent with group or team performance.  I learned a lot from my bosses over the years, good bosses and bad, an one thing I realized early on is that no manager is independent from his team.  So I made sure to speak regularly with my people, daily and weekly, making sure they knew I noticed good work and had suggestions on how to fix mistakes or improve poor results.  So I found that monthly meetings of about ten minutes with each employee, and the notes from those meetings - combined with a semi-annual review to summarize where they were at the halfway point - gave me a way to keep detailed results to support my annual review, and to not surprise anybody.  This has worked for me at every place I worked, because with very few exceptions, people want their good work to be noticed, and when they are having trouble they expect their boss to have ideas on how to improve, not stand around harshly condemning employees with no interest on helping them, which is rather what a manager ought to do for his people.

So, in summary, here are my suggestions to improve performance reviews:

[]  Speak with your people everyday, send written updates by email at least twice a month, noting both wins and areas for improvement;

[]  Make sure your team knows the key performance indicators - what does the employer say is most important, and how you will document success in those areas;

[]  Plan your meetings in advance, so you won't be distracted.  Remember these meetings are about both how the employee is doing, and how the employee feels about his job and the team;

[]  Fight for yor people's ratings.   HR can be grossly unfair to rewarding success, but if your company does not reward success, your best people will leave for companies that seem to offer that recognition.  Also, your team will respect you for following through on your commitment to your team.   You don't need to get angry with your boss, but make sure you document specifics on how your people went above and beyond, how their work mkes money or saves money for the company, and how your team adds real value to the company.

Thanks and good luck.