BY Bill Kozo

What's behind the top tech giants' elusive code of success?

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Occasionally it's nice to hear from your boss that you did a good job. For many, however, it's a rare occasion to even receive an “attaboy” (or girl) from anyone. More likely if someone comes to you (your boss in particular) it's to ring your neck or point his/her finger for some unexpected problem that “you” caused.

The other time you are likely to hear feedback is during your annual performance review.

Recently more and more management professionals are coming forward expressing concerns with the effectiveness of performance reviews. Here are some books on the subject:

* Abolishing Performance Appraisals: Why They Backfire and What to Do Instead; Tom Coens(Author), Mary Jenkins D (Author)

* Get Rid of the Performance Review!: How Companies Can Stop Intimidating, Start Managing--and Focus on What Really Matters; Samuel A. Culbert(Author), Lawrence Rout (Contributor)

* Catalytic Coaching: The End of the Performance Review; Garold L. Markle(Author)

From their book Abolishing Performance Appraisals, Coens and Jenkins cite several surveys that point to the appraisal's dismal performance[i]:

* “…more than 90% of appraisal systems were not successful.”[ii]

* “…most employers expressed “overwhelming” dissatisfaction with their performance management systems.”[iii]

* “…only 18% of respondents said their performance reviews were effective, with 48% of respondents calling them “second-guessing sessions”[iv]

* “…a mere 5% of H.R. professionals polled reported that they were ‘very satisfied’ with their performance management systems.”[v]

Managers don't like doing them, employees don't like receiving them and both managers and employees say they are a huge time-sucker.

Why we think we need reviews

Giving feedback about someone's performance is not the problem per se. The problem is why it is given, how it is given, and its usefulness for improving performance. The reasons for giving performance appraisals are[vi]:

1. Determine how much each employee is paid or who will receive various awards and incentives;

2. Make employees perform better for fear of receiving a negative evaluation or in the hope of getting a positive one;

3. Sort employees on the basis of how good a job they are doing so we know whom to promote; or

4. Provide feedback, discuss problems, and identify needs in order to help each employee do a better job.

Plus, other reasons include communicating with employees, and potential legal reasons. Let’s explore the problems with the first four reasons.

Determine Pay

This reason assumes that we can objectively and systematically assign value to the contribution of one individual. Below is a hypothetical example of a consumer products company.

It shows the inputs, internal processes, and the relationship to the outputs. It also shows the relationships to the internal functions. How can anyone determine the contribution of one individual to this system? There are just too many variables interacting with each other to be able to accurately determine the value of someone's contribution. Moreover, within each function, similar interactions take place, making it a venerable maze of confusion.Considering the above diagram, does it seem reasonable that with all of the dependencies on other functions that you can determine true value of a single person?

Many merit based pay systems are designed to reward those that contribute the most, however, most companies today strive to create a team environment. Individual reward systems are counterproductive to that quest, and sends a strong message to what is really important - individualism not teamwork. People will spend more time worrying about their own raises and how to make themselves look best rather than working together for benefit of the entire organization.

Also, most raises are given at the same time as the performance review. During the review, however, many employees are likely half listening because all they really want to know is, "How much of a raise am I getting?" so the developmental part of the process is lost. But if you insist on giving annual reviews at least separate when people receive their raise from when they receive their review. That way the development of the person will be the focus not their raise.

Give raises when people deserve them. Why wait to give someone a raise that deserves it today? Conversely, give people the chance to improve by giving timely performance feedback throughout the year if they are headed in the direction of not getting a raise.

Improve Performance

This reason for using performance reviews is effective in the short-term at best and demoralizing at worst. Using performance reviews as a method for improving performance cause people to focus on short-term results, fudge figures to look better just prior to their review, blame others for mistakes, distrust management for fear of being set up to fail, and a host of other negative side effects.

The employee will inevitably pay attention to their performance just before his/her review date. Their only focus during this time is pleasing the boss and appearing to "step it up" to ensure they receive a better rating and raise. Shortly after the review performance goes back to its normal state.

Sort Employees

Some companies rank employees and each year eliminate the "bottom" 10 percent. These "rank-and-yank" systems cause a number of unintended side effects among which include encouraging sabotaging others in order to protect their own rank, and reducing people's willingness to accept tougher assignments for fear of being ranked too low in their new assignment. Human behavior becomes more predictable when the protection of a person's livelihood is at stake. People would rather stay in their "safe" position as an A player rather than risk becoming a B or C player in a new position.

Another problem with this reason is assuming that the qualities of performance can be accurately defined. Your company might use a standard evaluation form with measures such as Leadership, Communication Skills, Teamwork, Judgment, Quality of Work, etc. There are as many different perceptions of these strictly subjective qualities as there are managers, not to mention the operational definitions of each quality. When one manager defines teamwork differently than another manager there is no consistency in the evaluation criteria. Without a consistent measure it is impossible to accurately sort people.

Feedback

This reason gets close to the real reason why performance appraisals are used. But if this is a valid reason then it shouldn't be reduced to an annual process. If employee feedback and development is the goal, then management should create a process that is on-going. It is not possible to develop an employee effectively during a one-hour meeting. This would be like trying to fly a plane by making one course correction during the trip. You'll end up somewhere all right, but where? The same analogy applies to using once-a-year performance appraisals and expecting the employee to end up at the intended destination.

Employee development, like flying an airplane, requires continuous adjustments. People change, the company changes, the market changes, goals change, requirements change, and so on. So this argument for using performance appraisals is flawed, since it is only used once per year, not continuously

Other problems

Aside from the problems just discussed, there are a host of other problems from the field of psychology such as:

* Categorization and stereotyping,

* Favoritism,

* Gender/race/age bias

* Confirmation bias

Rating errors such as:

* Leniency error,

* Severity error,

* Central tendency and range restriction error,

* Halo and horn error,

* Recency error,

* Fundamental attribution error, and

* Self-serving bias error.

What to do?

Replace annual performance reviews with real-time feedback and regular communication. No one should ever be kept in the dark about his or her performance. Not only is this a disservice to the employee, it is a disservice to the organization. Your job as a leader is to get the best results from the people you lead. By letting, what you believe to be poor performance to go unanswered for a whole year prevents people's best results since they are not given the feedback they need in order to perform better.

If you are not in a leadership role, request (insist on) periodic feedback from your supervisor so you have a clear picture of your performance. Be prepared for feedback that you might not like and be open to making changes based on what you hear.

With good leadership practices everyone will know where they stand and performance reviews become unnecessary.

What do you think? Is this something you can benefit from or do you have a few tricks up your sleeve that are just as powerful? Make your voice heard by leaving a comment below. Don’t forget to hit the share button if you know others who will find this post useful.

I.C. Collins ~ Author, Educator, Trainer and President: Has One Simple Goal: Improve a Million Automotive Sales Consultants Lives with our ebook "How to Succeed in the Automotive Sales Industry"

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