Employee Performance Reviews Do More Harm Than Good

http://www.jacksonfish.com/blog/2009/05/21/employee-performance-reviews-do-more-harm-than-good/

by hillel • 17 years ago

30 26 17 years ago

I don't think this is necessarily true. I realize most employers aren't like this, but my boss does a very good job of politely and clearly telling me what he expects of me and what I can expect from him. Our performance reviews are always positive experiences, and I leave with specific goals to accomplish before the next review: sometimes goals to improve my job performance, sometimes goals to improve myself. Instead of focussing just on a bonus or pay increase, it's basically a reconciliation of "what would you like from us", and "what we would like from you".

I think if more employers looked at it this way, and were more casual and open about the whole process, it would be a lot more beneficial to their companies.

noodle• 17 years ago

i don't necesasrily disagree with you here, but i think that the process would be better if it were a rolling review with constant feedback and dialog, instead of something built up as an important once-a-year event.

Retric• 17 years ago

Rolling feedback should be part of the annual review process at any competent company.

Where I work the annual review looks at those above, below, and beside you and doing that several times a year is far to time consuming. IMO, the trick is managing the less formal feedback and using that as part of the formal review. Which is why your manager does not create your review. They might be biased by something from last week but your coworkers tend to think back to the important projects over the year.

TallGuyShort2• 17 years ago

Oh I agree with that - it's important to cultivate an environment where constructive feedback is constantly being exchanged. That's hard to do - but when it happens, it makes a big difference.

hillel3• 17 years ago

Constant honest and open feedback is always a good thing. My point is that performance reviews are often used as a substitute for constant honest and open feedback. And as such, they are a failure.

bonsaitree• 17 years ago

Unfortunately, at least in the U.S., unless there's some kind of formal & documented evaluation process for compensation, they're opening themselves up to a whole host of potential lawsuits.

One useful strategy we've had is to do 90 day (quarterly) quickie evaluations followed by a formal, but succinct, annual review. If both parties are doing their jobs, "pathway/goal" guidance given informally during the quarterly process and throughout the year should lead to very little surprises in the annual review.

dreamz• 17 years ago

Also performance review depends upon the corporate culture but then the bigger you are the diluted culture you have ...

At the same time you can use performance review to your own advantage, how? well you can easily identify whether your manager is just a good manager or GREAT manager - Good managers help their employees succeed in whatever role they happen to be in. Great managers see the unique talents of each employee, and then create the role that's a perfect vehicle for those talents. Great managers remove the obstacles that prevent their employees from unleashing their talent. And they make sure each employee has the right opportunities, the right stage, the right audience, to be fully appreciated.

andygeers• 17 years ago

Presumably the author here is drawing a distinction between performance reviews and development reviews? It seems like it's quite a good thing to review how a developer is getting on regularly, and find out what things they'd like to do more of and how they could develop their skills, without it being tied to bonus distribution.

PaulMorgan• 17 years ago

I once worked with a manager who was very up front about using performance reviews to retaliate against any subordinate who crossed her. Luckily she wasn't my boss.

gaius• 17 years ago

Your boss was merely more subtle about it.

kolya3• 17 years ago

What blows my mind is that no company I have worked at has ever set performance goals on day 1. It doesn't make sense. We set goals at annual reviews so why not on day 1? Why blindside an employee during the first annual review?

I talk to everyone on my team 3 times a year to make sure I'm giving them what they need from me and vice versa. The informal manner helps in keeping the whole process relaxed and the feedback genuine. The 4 month period in between gives ample time to improve things without stretching it out for a whole year. Iterate, get feedback, iterate, get feedback. It works for startup business plans so why wouldn't it work for self development?

joshhart• 17 years ago

This article feels like it was taken out of 7 Habits - Think Win/Win. Recurring performance reviews certainly cause unnecessary competition and fear among employees, breaking up their "team" ability. I just wish the article had addressed the deeper question of how to tell an employee they're doing poorly without such a review.

hillel3• 17 years ago

I'm planning a follow-up post on that topic. :)

jdrock• 17 years ago

My girlfriend is a Ph.D. student in industrial organizational psychology. She had this to say:

I think this view is unnecessarily extreme. I think the correct way it should have been presented is that performance reviews should be done in a more useful way. Not all performance reviews are for the purpose of rationalizing bonuses. I think feedback on one's performance accompanied with goal setting of specific behaviors is fundamental in sustaining good work and motivation in employees.

I do think that ranking employees doesn't work most of the time because it not only creates competition but discourages those who have been performing well, but just not so much as others who could potentially be ass-kissers as what the article says.

The bottom line is that , w/o a review/feedback on your on-going performance, you wouldn't have an idea of what you should work towards to and u cant assume that all employees are intrinsically motivated to do better.

Heuristically, people lose their sense of engagement about 5 months after they are hired and this can keep deteriorating if immediate supervisors don't provide the support/encouragement/feedback.

One last thing, research has repeatedly shown that regular performance feedback increases motivation and performance in the long-run. what's important really is how the feedback is given.

hillel3• 17 years ago

I generally agree with your girlfriend.

And to be clear, I never said that regular consistent performance feedback was bad. I said that the annual performance review was not a substitute for it.

ironkeith• 17 years ago

In my experience employee reviews are typically de-motivational. My employer has me rate my team members on a scale from 1 to 6 on a variety of work related criteria. The basis for getting a raise rests on the employees ability to increase their ratings on a review to review period. It's horrible (and I've told them I think so).

The entire ratings system is ripe to be exploited by people who know how to play the game. This is especially bad if non-technical people are reviewing technical people. I had to witness the worst developer on my team become the highest paid because he knew how to sell himself and could speak a language that upper management understood.

I'm more in favor of (arguably) less subjective methods of determining an employees worth (like Bioware's RPG style ratings, or Joel Spolsky's ladder). There's still room for person bias, but at least there's less room.

paulreiners• 17 years ago

> This is especially bad if non-technical people are reviewing technical people.

Hear, hear. There is nothing more maddening than having someone dumber than you tell you that you're dumb once a year.

Tamerlin2• 17 years ago

My situation is similar; the manager who decides on reviews for our "team" THINKS he's technical, but he's basically useless. He hinders communication between team members, reassigns people to projects arbitrarily and without warning, and has had a 100% attrition rate for his team since he joined it. No one, even folks on other teams, have had good experiences working with him, because the one thing that he does NOT do is work to remove barriers that we developers have to face in order to get our jobs done. (He creates far more barriers than he removes.)

And yet HE is the one who evaluates OUR performance... making the entire process a waste of time.

To top it off, he isn't even honest in his reviews... as far as I can tell it's all politics for him, basically doing anything he can to shift blame down from him onto us.

Silhouette2• 17 years ago

This is why everyone's review should include feedback from peers and, where applicable, subordinates.

It's also a good argument for including discussions with your boss's boss in your review, to avoid a poor but politically savvy manager being able to competely filter feedback from everyone below them to the higher-ups who could do something about that poor manager in the middle.

cscott• 17 years ago

Employee performance reviews that enforce an arbitrary curve-based ranking or grading system often to do more harm than good.

I have seen employees who have performed well all year get demolished by a performance review where they were rated a "3" or "4" out of "5" because HR required only one "5" per department and two or three "4"s, and expect the majority of employees to be a "3". (Thankfully, they didn't require that each department designate a "1" goat.)

That being said, I have found that performance reviews that focus on how the employee has improved the business and seized opportunities (or not) and focus less on artificial competition are extremely beneficial.

tom_b• 17 years ago

+1 for mentioning the arbitrary curve-based ranking common in big companies.

Tightly coupling salary/bonuses to performance reviews with this type of system is a disaster.

Unfortunately, my experience is that most managers in such a system lack the insight to minimize the effect on employees. Maybe when you're talking about minimizing the effect of telling an employee they are (non-deservedly) one of the "3" performers, you've already lost the battle . . . Add in the inevitable weird corporate culture stuff "you are a '3' because you got promoted this year, it's just your turn in the box" and you have a perfect recipe for draining motivation away from employees.

mclin• 17 years ago

The last company I worked for had these '360' performance reviews where you get reviewed by a few coworkers as well as your boss. Also there was no money involved. I thought it worked really well. While you'd hope your coworkers would give you pointers on how you could improve throughout the year, realistically, shyer developers won't do that, and this gives them the opportunity to do so (mostly) anonymously.

sokoloff2• 17 years ago

If you eliminate performance reviews altogether, and issues rewards as team rewards, why would top performers (the ones who might regularly bank 7-15% raises instead of 2-4% raises) stay with your company for the rock-steady, everyone-gets-5% return, when they can go somewhere else and make meaningfully more money?

It seems that the socialist (not tarring, just naming) approach to granting team raises is a powerful attraction to low performers.

In a small startup, with relatively little money to throw around, it probably doesn't matter and eliminating them may actually be a net win. Once the company reaches the 500+ person mark, failing to recognize ($$) individual achievement just demotivates and chases away those who would be your stars.

Silhouette2• 17 years ago

But what is "individual achievement" in a field like software development? In the sort of teams one typically finds in those 500+ person organisations, nothing is truly done by individuals.

Even if a genius developer produces a brilliant implementation of new feature quickly and with a low bug count, someone had the idea for that feature and worked out how it was going to integrate with other features, many people probably wrote a load of other code the feature depends on even if that code didn't itself create the same buzz, people were involved in testing the feature, producing the marketing, and on and on. While everyone might agree that the genius developer had done a good job for the team, how can you say quantitatively and objectively what his contribution was? 10%? 25%? 90%?

In contrast, the success of a project team is generally fairly easy to quantify: divide the cost of running the team by the amount of revenue generated by the projects they produce.

The sad reality is that while serious guru developers may indeed be an order of magnitude more productive than average, and some at the other end of the scale are actually counterproductive, salaries for employees will never realistically reflect this. The bottom-feeders always get more than they deserve, while the top guys will never get credit proportionate to their contribution. After all, this is why many of us get out and go freelance or start our own businesses.

But within that reality, I can't help wondering whether the guys at the top would still rather work with a motivated team than be individually slightly better compensated but surrounding by jealous, bitter colleagues.

sokoloff2• 17 years ago

Another alternative is to permit salary ranges that are a factor of 2 wide, meaning you can literally pay your "best" people (itself a terribly loaded/complex term) twice what you pay the average qualified employee at that level. Yes, paying someone 10% more than their peer isn't enough to recognize excellence. Paying them double probably is in many cases. Hell, even 50% over makes a marked difference in quality of life and is going to be both noticeable and relatively harder to match.

In my past experience, even at employers where everyone to the last employee was totally qualified, there was general consensus about who the top, distinguished cohort was, and to the extent that people were jealous or bitter, it centered around the fact that those people were better, not around the fact that they got paid more.

Even if nothing in a mid-sized company is truly done by individuals, I know the handful of employees that would really hurt to lose and the buckets full where we would be perhaps genuinely sad to see them go and wish them well in their next endeavor, but that I wouldn't lose much sleep over it. Survey 10 high-level managers, and the lists would line up pretty well I imagine. If that's the case in your org, and you aren't making damn sure that pay, within fairly BROAD bounds, isn't going to be a reason for the stars to walk, you're doing it wrong IMO.

Employee Performance Reviews Do More Harm Than Good

Related Stories