A friend of mine recently told me she’d just received the best performance review she’s ever had. It was a shame, she said, since she wouldn’t receive a correspondingly positive raise. Her employer, like many others, froze salary increases in response to the recession. (Some companies took it even further and cut salaries)
I wasn’t surprised. As those on both ends of performance reviews know, the boss must find the right balance of positive and negative to justify the predetermined raise. Since her boss didn’t have to wedge my friend’s performance into a narrow and already determined slot, he apparently flagged fewer areas for improvement and offered what she felt was a more honest evaluation. Many of us have improved a desired metric but not seen a larger salary gain because – surprise – a different area was found wanting in the next review.
But this is not the biggest problem with performance reviews. As Jeffrey Pfeffer, a professor of Organizational Behavior at Stanford University’s Graduate School of Business, wrote in BusinessWeek, they just aren’t very objective. For instance, managers consistently give better reviews to employees they’ve hired vs. those they’ve inherited from other managers. Also:
- Many companies do them just once a year, and most managers base the reviews on more recent events rather than the whole year.
- When employees’ performances are evaluated against those of their peers, it fosters a culture of competitiveness rather than one of collaboration.
- And the most interesting shortcoming offered by Pfeffer: Focusing on individual performance de-emphasizes overall corporate performance, which is more affected by systemic variations than individual ones.
The biggest issue that Watermark Consulting founder John Picoult has with performance reviews is an over-reliance on employee self-evaluations. Writing in Forbes, he says many managers lean too heavily on self-assessments rather than providing constructive feedback. This is particularly problematic considering that Cornell researchers found that poor performers tend to see their efforts through rose-colored glasses while top performers are often needlessly hard on themselves.
So, how can you improve performance reviews? Some suggestions from Pfeffer, Picoult and employers like Procter & Gamble:
- Make criteria more explicit and objective.
- Involve more than one person in the ratings process. (Google emphasizes reviews from peers rather than managers.)
- Write reviews from scratch instead of simply basing them on self-assessments.
- Adjust goals to make sure they accurately reflect what can be achieved given prevailing economic conditions. (This is a step recently taken by Procter & Gamble.)
- Keep a diary so reviews reflect cumulative performance and recent events don’t receive undue emphasis.
- Keep the number of evaluations managers are expected to provide to a manageable number.
- Periodically review the review process. (Southwest Airlines employs talent-development managers to help coach folks on how to conduct reviews.)