Welcome to your annual performance review.

In the next 90 minutes we will:

Review your performance over the last 12 months

Follow up on the goals from last year’s review

Set new goals for your professional development and career

Handle any problems you might have had in the last year

Fill out this 8-page form required by HR

Coach you to better performance

Get your totally open and honest feedback to my leadership

And of course, we will both pretend that the results of this little chat will not in any way influence the salary adjustments coming up in two months.

Now… any questions?

It seems that no one likes performance reviews. Joel Spolsky, the CEO of Fog Creek Software certainly doesn’t:

At two of the companies I’ve worked for, the most stressful time of year was the twice-yearly performance review period. For some reason, the Juno HR department and the Microsoft HR department must have copied their performance review system out of the same Dilbertesque management book, because both programs worked exactly the same way. First, you gave “anonymous” upward reviews for your direct manager (as if that could be done in an honest way). Then, you filled out optional “self-evaluation” forms, which your manager “took into account” in preparing your performance review. Finally, you got a numerical score, in lots of non-scalar categories like “works well with others”, from 1-5, where the only possible scores were actually 3 or 4. Managers submitted bonus recommendations upwards, which were completely ignored and everybody received bonuses that were almost completely random. The system never took into account the fact that people have different and unique talents, all of which are needed for a team to work well.

(source)

Almost every medium-sized or large company does performance reviews. Everybody does it – and I think it’s time to stop!

Performance reviews are fundamentally broken. Managers hate them and fear them and resent the drain on their time.

Employees often leave reviews demotivated, cynical and with no clear idea of how well they’re doing and how to improve:

Research into British workers found a quarter of respondents thought managers simply regarded the reviews as a “tick-box” exercise, while one in five accused their bosses of not even thinking about the appraisal until they were in the room. Almost half (44 per cent) did not think their boss was honest during the process, 29 per cent thought they were pointless, and a fifth felt they had had an unfair appraisal, according to the YouGov poll of 3000 workers. Only a fifth believed their manager would always act on what came up during the review and 20 per cent said their boss never bothered to follow up any concerns raised.

(source)

There is a lot of advice out there on how to fix performance reviews but in my opinion, performance reviews would still be worse than uselss, even if we could fix everything that is currently wrong about them and the very fact that companies fell the need to have them, shows that something is seriously broken in our workplaces.

Here’s why performance reviews and appraisals are such a waste of time and why our workplaces would be better off without them.

1: Everybody hates them

Managers actually cite performance appraisals or annual reviews as one of their most disliked tasks (source) and as we saw above, employees dislike and distrust the process too.

Performance reviews are supposed to be about giving people feedback on their past performance and setting goals for the future. This is impossible in a format that people dislike this intensely.

Studies show that if you’re in a bad mood (and lots of people are during their review meetings), you’re not open to criticism and suggestions. You’re also almost certainly not in the mood to make big plans for your future growth and development

2: They try to do too much

Tom Coens and Mary Jenkins in their 2000 book called “Abolishing Performance Appraisals: Why They Backfire and What to Do Instead” argue that employee reviews take on too many tasks at once. They’re about communications, feedback, coaching, promotion, compensation and legal documentation. Good luck doing all of that in an hour or two!

3: They become an excuse for not talking for the rest of the year

“Yeah, I know that Johnson in accounting is lagging a little and seems dissatisfied, but his performance review is coming up in 4 months – we’ll handle it then.”

No. No, no, no!

In fact, If you have good, open, honest communication between managers and employees, if people constantly know what they do well end where they can improve then you have no need for a formal review process.

4: They are too structured and formal

Many companies have noticed that formal reviews are not working and the response, overwhelmingly, has been to formalize them more. There are now more questionnaires to fill out before, during and after for both employees and managers. More boxes to tick. More ratings on a 1-5 scale More time spent preparing.

But here’s the thing: This actually detracts from the value of the conversation you will have. The more you structure the conversation, the less likelihood that you will actually get to talk about what’s important.

The more boxes to tick, the more likely it is that it will get treated as an exercise in “filling in the blanks.”

5: They focus too much on the quantifiable

Joel Spolsky has another good example:

…one friend of mine was a cheerful catalyst, a bouncy cruise director who motivated everyone else when the going got tough. He was the glue that held his team together. But he tended to get negative reviews, because his manager didn’t understand his contribution.

Many of the most valuable and important things we contribute to the workplace do not fit into those little check boxes. If a manager doesn’t understand this during the year, he will most certainly not get it in the performance review.

6: They may not be formally connected with promotions and salary negotiations – in reality everyone knows they are

A lot of companies have noticed that performance reviews go even worse when they also double as negotiations about salaries and promotions.

Consequently they have separated these two processes and will first have appraisals and then later on salary negotiations.

Riiiiiight. Does anyone expect this to work? Will managers forget everything they said in the appraisal when setting salaries later on? Will employees fall for this and be more honest, rather than try to make themselves look good?

Of course not. But trying to pretend that’s the way it works just adds another layer of deception to the whole sorry mess.

7: No one says what they really think

Managers can hold back from offering negative feedback because they fear conflict.

Employees often don’t offer honest criticism of managers and workplaces out of a fear of offending and the knowledge that, regardless of formal policies, the content of this talk will affect your salary.

In short, everyone is on the defensive from the beginning.

8: They take a LOT of time

Everybody’s busy these days, and on top of your regular tasks, once a year you have to find time to prepare for, execute and follow up on the performance reviews. To make matters worse, very few companies factor in this time in peoples’ schedules and give them a lighter workload during those weeks.

This means that rather than doing it right, many people focus on doing it fast and just getting it over with, making the whole process worse than useless.

9: They become a crutch for bad managers

If you’re not capable of giving your employees regular, specific, timely and relevant feedback (good and bad) – you should not be a manager at all.

And formal performance reviews are not the solution! The managers who actually do manage to give worthwhile performance reviews are invariably also those who don’t need to have them because they already excel at providing regular, constructive feedback.

What to do instead

A 2006 Harvard Business Review article talks about how to fix employee reviews by doing things like:

Have them more often than annually

Make their purpose clear

Give continuous feedback

Add forced ranking of employees (worst idea ever!)

But I think the solution is a lot simpler: lose’em. Stop having formal employee reviews, whether annual, semi-annual or quarterly. They’re not only a waste of time, they’re actively harmful to motivation and happiness at work.

As Peter Block says in the foreword to the Abolishing Performance Appraisals book mentioned above:

“If the appraisal process is so useful, we should consider using it in our personal lives. Would we say to our spouse, significant other or intimate friend, ‘Dear, it is time for your annual performance appraisal. For the sake of our relationship and the well-being of the family unit, I want you to prepare for a discussion of your strengths and weaknesses and the ways you have fallen short of your goals for the year. ” ‘Also, honey, I would like for you to define some stretch goals for the coming year.’

(source)

Good luck with that :o)

Your take

What do you think? Do you know of companies that have abolished performance reviews? Do you know of any that have them and do them well? What happened at your last performance review? Please write a comment, I’d really like to know.

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