The Simple Truth About Performance Reviews: We Need to Do a Lot Better

This was prompted by John Hollon’s TLNT article, Weekly Wrap: Surprise! We STILL Really Hate Performance Reviews.

In his own style, John was highlighting a column from The Washington Post on The corporate kabuki of performance reviews. I’ve stopped counting but that may have been the millionth discussion of this scourge of the HR community.

The reason for writing is simple – THIS PROBLEM CAN BE SOLVED. We must be masochists to allow it to continue. Here’s why:

  • First, this is not an HR problem, it’s a management problem. HR has virtually no day-to-day involvement with the management of employee performance. We carry the towels, intervene in disputes, and keep the records. Managers are paid to manage performance.
  • Second, we have perpetuated the idea from the 1950s – when the concern was unionization – that everyone needs to be evaluated under the same performance criteria. That violates the obvious need for managers to have meaningful discussions of performance with their people. The Post column referred to “the evaluation criteria so utterly unrelated to our jobs.”
  • We got on the bandwagon of technology and now have, quoting from The Post column, “buggy software and tedious online tools” that effectively control what should be an honest discussion between managers and their people. Coincidentally an email from HRWorld offered a comparison guide for eight performance and talent management software products, with each evaluated on over 40 “specific tools.” Wow!

Abandoning reviews makes no sense

The argument for abandoning performance reviews makes no sense. To state the obvious, people need feedback if we want them to improve. Plus HR got started decades ago to counteract supervisor bias and arbitrary actions. Current practices do not serve either purpose adequately.

The solution starts with top management. Leaders need to make the management of performance a priority. Many will need to be convinced they should expect a payoff in improved performance. Managers and supervisors can be expected to emulate their leaders.

Another starting point is staffing supervisor and manager positions with individuals who promise to be effective managers of people. Yes, training is important but it’s not the key to producing effective managers.

The skills needed to be a good manager are well documented. A manager’s effectiveness as a supervisor needs to be addressed in his or her evaluation and prominent in decisions related to rewards and promotions. Weak managers should be warned, offered coaching and refresher training, but if problems continue, moved to a role where they can do no harm. That sends a powerful message.

Equally important is HR’s persistence in using a single set of performance criteria for obviously different jobs. It’s well established – employees need to know what’s expected and what they can expect. But we clearly do not have the same expectations for each employee.

Helping managers live with the system

There is no reason to use the same criteria – none. Textbooks argue for validation – accurate ratings – but current approaches don’t meet that test. The Post column cited a CEB study showing employers cannot consistently identify the highest performers – and they normally stand out!

I like the analogy of a football team. Each position requires different skills, has different performance measures, and different evaluation criteria. HR and accounting, for example, are different “positions.” What possible reason is there to rate them on the same criteria. Any comparison is meaningless.

The people who know best how to evaluate performance are job incumbents. The experienced, better performers in an occupation, serving as Subject Matter Experts (SMEs), have high standards, know the problems, and with guidance can identify in two or three meetings content valid criteria.

And as jobs and circumstances change, they can meet when warranted to update the criteria. The plus is their answers will be far more credible and accepted more readily by their peers than anything introduced by HR.

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The curse of inflated ratings

The other obvious stakeholders are the managers who have to live with the system. They need to be involved in the planning. It’s their “tool” and their involvement creates a sense of ownership.

Relying on job-specific criteria makes both managers and their people more comfortable when they discuss performance issues. It provides a focus to the strengths and weaknesses relevant to the job, as well as the justification for ratings. It’s never easy defending or justifying ratings on abstract criteria like “customer focus,” or worse, “integrity” and “creativity.”

The final point is that far too many organizations have accepted inflated ratings as inevitable – which is to acknowledge they are not accurate and if tested in court, would not be defensible.

Forced distribution policies are far too crude, disliked by everyone, and have no theoretical basis. Forcing ratings to comply with the policy highlights the meaningless comparison of performance on wildly different jobs.

There is a solution to the inflation problem, actually two solutions. One is to rely on what Ed Lawler called “calibration committees,” where managers have to explain and defend at least the high and the low ratings.

Yes, we CAN do a lot better

The second step to control inflation is to define two additional performance levels — outstanding and unacceptable. That with “expected performance” is three levels and it defines the measurement scale. Employees want to know what they need to do to be rated as outstanding. That forces managers to be more honest in their ratings.

Finally when there are problems as serious as those highlighted by critics, it makes sense to bring managers and employees together in focus groups to discuss the problems and develop solutions.

Employers should promise to address their concerns. We can do a lot better

Howard Risher is a private consultant who focuses on pay and performance. His career extends over 40 years and includes years managing consulting practices for two national firms. He recently became the editor of the journal Compensation and Benefits Review. He also has an MBA and Ph.D from the Wharton School of the University of Pennsylvania. Contact him at h.risher@verizon.net.

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3 Comments on “The Simple Truth About Performance Reviews: We Need to Do a Lot Better

  1. For a season, I was able to eliminate the numerical part of performance reviews. I think my staff and I found the change to be beneficial and productive. The HR-types never could quite get there.

  2. Howard, this is one of the better reviews of performance management that I’ve read, and I’ve read quite a few. Thanks for sharing.
    I work for one of the largest providers of performance mangement technology. My team’s focus is looking across our 3500+ customer base to determine what differentiates companies that get a lot of business value from our technology from those that just get automation. Since all the companies are using the same system, the differences are not about the technology but how it is used. We will soon be releasing a lengthy design guideline document outlining results based on our research. But here are a few quick observations that expand on what you have written.
    1. Good performance management requires having clear performance criteria. There are three basic criteria used to evaluate if someone is a valuable employee: do they achieve their goals, do they behave in a way that reflects the companies values and beliefs around performance (behavioral competencies), and have they acquired skills valued by the company. Most companies focus on goals and competencies and put little emphasis on skills. This makes sense since people are valued more for what they do than what they know (i.e., you have to use your knowledge to make an impact).
    There is massive variance across companies in terms of how well managers actually define and communicate to employees what they want them to do. If managers do not take the time to define what they mean by “effective performance” then the PM process is going to struggle.
    Note, while goals and skills tend to be job specific, competencies often generalzie across companies. I agree with your comment about the need to have job specific performance criteria as it pertains with goals and skills, but there is often a lot of value in having generalized competencies models that allow companies to evaluate people who work in different jobs or departments against a common standard.
    2. The rating process is very important. There is no one best way to do performance ratings. I’ve seen effective methods done with numbers and descriptive labels (although I personally think descriptive labels tend to be far more effective). What makes the biggest difference is whether the company invests time to educate managers on how to make accurate ratings and communicate these ratings to employees in a way that does not demotivate those who may be rated lower. Technology is having a huge imact in this area because it makes it much easier for companies to track whether managers are taking the rating process seriously, institute things like calibration reviews and expected distributions (note I did not say “forced distributions”), and provide embedded rater training in the system itself. A final note, any company that believes in paying or promoting employees based in part on their past perforamcne uses performance ratings whether they say they do or not – the difference is just whether the rating process is consistent, transparent and well defined.
    Long response to your post, but this is a topic I think about a lot. Steve

  3. I am totally agree with Steven hunt, performance management software’s and other automated software’s used in organizations are to optimize the performance of your organization but they need some input to work well, The better given input the better results you will get and if there is good management in your company with good software’s like http://www.cognitohrm.com/benefits/. you will definitely get good results.

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