The documenting of the manager’s opinion becomes hugely important to each employee because the employee’s career and reputation is built upon the manager’s opinion. Over time, that reputation is encased in a sequence of official performance reviews, each conducted by a single individual. If a review is inaccurate or poorly done – or prejudiced – the reputation becomes a long documented series of misleading opinions.
Negative reviews engender a “doom loop” for an employee’s reputation: they lead to low expectations and limited opportunities. These in turn feed all sorts of career-limiting consequences such as being passed over for promotion, lower compensation, and the crushing awareness of being labelled inferior. Unless intervention successfully breaks the cycle, failure becomes a self-fulfilling prophecy, and employee failure means a loss of the investment – including recruiting, training, and management time – the company has put into that employee.
Are negative reviews always unjustified? Not at all, but the single point of failure is a structural defect that endangers the entire performance management process.
In comparison, consider the consequences of an overly positive review. Imagine someone who is an average performer but an excellent office politician. The manager’s favourite, he or she showcases work, navigates egos and bureaucratic red tape, and flatters and promotes the boss’s interests. Is it possible that this person might receive rewards greater than his or her contribution merits? Might people who are more productive but less skilled in communicating their value notice and resent this situation? Is the best performance receiving the best reward? The answer is obvious to experienced HR staff: We’ve all known such people! These commonplace scenarios sow cynicism, mistrust, and low morale among employees. Is this the way to build a stronger work force?
Managers promoted up through the ranks have often arrived in their position because they are skilled in their field. An expert software engineer or accountant or project manager might lack management skills, especially skills he or she has never been required to use. How are they supposed to be good at reviewing performance? They rarely receive training, participate in a standardized system, or even get coaching from a more experienced manager. Practice is infrequent, so real expertise is hard to acquire.
The skills that make a good reviewer, coach, or mentor are not always present in managers who have risen to their position for a variety of accomplishments. For example, a manager might not possess the communication skills appropriate to providing critical feedback to constructive effect. In a formal, structured setting, many managers feel unduly constrained by the forms and format of a traditional review. Moreover, some managers simply lack insight, empathy, or understanding outside their technical areas of expertise.
Annually or semiannually, these managers consider the performance of each team member, rank those individuals as best they can, and then return to the daily complexities of management. The real practice of assessing and appropriately rewarding performance is an afterthought for many. Furthermore, managers are not omniscient; they cannot spend a work year trying to observe every staffer at all times, taking meticulous notes all the while.
Managerial temperament bends the system, too. In a 2010 WorldatWork/Sibson study, 63 per cent of respondents felt that managers’ lack of courage to have difficult performance discussions was the top challenge in performance management. Employees felt that feedback was inconsistent and not provided in a timely manner. (If management were easy, business bestseller lists wouldn’t cycle a seemingly endless supply of management advice.)
In response to the single point of failure problem, HR invests in automated or standardized systems of performance management and coaches and cajoles managers to improve the accuracy of their performance management. Sometimes HR introduces more complicated techniques, like 360-degree reviewing. HR makes the best of a flawed setup.
The annual review is outdated in the world of the work stream. It is a static statement in time. Typically, managers’ judgments about performance that will colour the next 365 days are based on reactions to the last 365 days. Talk about a file-bound system!
Can This System Be Saved?
The traditional review’s flaws can be fixed. Its single point of failure can be supplemented by additional inputs if done correctly. A better performance review system will:
- Remediate the “single point of failure” threat inherent in today’s manager-centric system
- Preserve the manager’s accountability for performance
- Set performance objectives that adapt to changing business conditions and include unanticipated deliverables that go above and beyond the job description
- Recognize the importance of employee engagement and company culture
- Assess employee performance from many sources – the peers, managers, internal customers, and others who witness day-to-day work, supplying much more data via crowdsourced information from the front lines of business
- Observe hard-to-quantify factors like creativity and self-discipline
- Render detailed analyses of performance on a host of individual, group, and companywide factors and relate them directly to overall performance metrics such as revenue, profit, and time-to-market
- Maintain the strengths of the traditional performance review
Social recognition, in which employees award each other for observed great performance, alleviates the shortcomings of the traditional review.
It is not a complete or radical substitute. The traditional review is established, and as we have seen, it has some useful qualities. What is needed is a balance of traditional review and social recognition inputs in a larger, ongoing, day-to-day system of performance management. Combine the formal, scheduled, one-to-one process of traditional reviews with the informal, spontaneous, many-to-many capabilities of social recognition, and a modern, robust performance management system comes into being.