I’ve given hundreds (maybe thousands?) of performance reviews over the years, and for the longest time they always left me with a nagging feeling that they were ineffective and a poor use of time. A few years ago I looked into all the research I could find on the topic, experimented with my own team, and wrote down the gist of what I’ve found most effective. Hope you find this helpful!
- Give feedback consistently. Doing it once at year-end doesn’t work. Conversations need to happen regularly.
- Don’t rank people or give specific grades (e.g., “exceeds expectations”). This doesn’t effectively capture the full contribution of employees and isn’t actionable for the receiver of the feedback.
- Decouple the bonus conversation from performance feedback. Never discuss performance in the same sit down as money. When people hear about money it lights up very different parts of their brains, which makes performance related feedback borderline useless.
- Focus on growth mindset and try to use objective data when citing areas of strength or improvement. This is really, really hard, to the point where some experts recommend not giving areas for improvement at all – rather just point out in the moment when some behavior is not ideal. Studies have found most people (especially top performers) take constructive feedback negatively, hurting both motivation and performance, thus achieving exactly the opposite of the intended goal!
- Ask for feedback while giving it. Make the conversation two-way. Try to understand what the company could improve, and how you could more effectively manage or help the employee. The conversation should be about how the team can get better, not an individual person.
Here’s a block quote I found particularly interesting from an interview with UCLA professor Samuel Culbert and University of Limerick Professor Kevin Murphy who’ve spent many years studying performance reviews.
The way Culbert sees it, the performance-review dynamic is inherently doomed by the opposing goals of the manager, and the employee. “When it comes time for an annual performance review, the employee walks in the room and wants to hear the good things they’ve done, the contributions and sacrifices they’ve made, have been seen, valued, and they’re going to be rewarded,” he says. “And the boss walks in the room to tell the individual their faults.” Culbert, who, by his estimation, has spoken to more than a hundred thousand employees and managers about performance reviews, says that this dynamic erodes trust, often requiring that the person who hired the employee is the same one tasked with “breaking them down.” The manager is essentially forced to find fault with an employee they may be perfectly satisfied with, because if they don’t critique them, HR will think the manager isn’t doing her job, says Culbert.
Because the manager may not have any real investment in what she says, and the employee may have no desire to change (especially not when criticized), the entire process becomes a charade. Culbert, who is also a clinical psychologist, says these annual-review theatrics are hard on employee morale. “[The annual review] puts a huge amount of pressure on people, and causes people to go into a constant pretending. It’s a terrible pressure,” he says. “And we all know that when people can be their authentic selves, they have their best chance for being comfortable, and for being their best.”
Here, too, is the other essential crisis inherent to the performance review: they don’t work, according to Kevin Murphy, chair of work and employment studies at the University of Limerick and co-author of Performance Appraisal and Management. “Almost everyone believes feedback is important and useful, but the research says, ehhh, that’s not really quite true,” says Murphy. “About a third of the time, feedback makes things better, about a third of the time feedback makes things worse, and about a third of the time it has no effect whatsoever.” In the grand scheme of things, he says, feedback is “a wash.” There is only one, relatively short period in which manager feedback is constructive to employees, says Murphy, and that’s when they’ve just been hired. Once an employee understands his or her job duties, feedback has little to no effect on their overall job performance, which is insane, considering how much time and energy we devote to giving and receiving it.
Obviously, there are instances in which an employee’s performance is bad to the point that intervention is needed. But, says Culbert, it’s rare, and usually the solution is to let that person go. “If you want to fire somebody, then you document what they’re doing that’s off, and you make your case,” he says. “But most people are good enough employees, who could be a lot better if they had teamwork with their boss, so that the two of them worked effectively for the company’s best interests.” Employees want to see their managers as allies, Culbert says, not antagonists, but reviews — in which, typically, the employee isn’t offered the ability to critique her manager in kind — make that impossible. Though some companies offer “360 degree reviews,” in which everyone (including managers) receives feedback from not just supervisors, but peers and subordinates, Culbert says the anonymity inherent to this technique creates fear. Murphy adds, too, that 360 degree reviews create risk by inviting too many perspectives to the table, such that it’s easier for an employee to discount any (or all) of them.
Sources
https://www.wsj.com/articles/SB122426318874844933
https://hbr.org/2015/04/reinventing-performance-management
https://www.strategy-business.com/article/00275?gko=586a5
https://www.bbc.com/worklife/article/20190501-why-appraisals-are-pointless-for-most-people
https://www.gallup.com/workplace/249332/harm-good-truth-performance-reviews.aspx
https://blog.clearcompany.com/mind-blowing-statistics-performance-reviews-employee-engagement
https://www.15five.com/blog/performance-reviews-research/
https://blog.bonus.ly/6-research-backed-reasons-rethink-annual-employee-evaluation
Nate Clark's Musings 
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