10 people to listen to when it comes to performance reviews

Despite being a mainstay in corporate culture for a long time, performance reviews are a huge point of contention. It seems like everyone hates them, and yet they persist. So, do performance reviews work, or are they holding us back?

Public opinion on performance reviews is in the gutter. A CEB study of Fortune 1,000 companies found that 66% of employees were 'strongly dissatisfied' with their evaluations. A similar percentage even thought they were completely irrelevant. So, is this a case where management's wants don't align with those of employees? We don't think so. Previous CEB research cited by SHRM shows that 95% of managers and 90% of HR professionals see performance reviews as inaccurate with no obvious benefits.

But do performance reviews work? We'd argue yes - BUT only when they're used as part of a more continuous approach to performance management. Something we cover in our performance conversations best practice guide here.

1: Leadership experts and speakers Jennifer Currence & Art Jackson

Jennifer Currence is CEO of WithIN Leadership. Art Jackson is President of Eagle's Nest Performance Management. So, do performance reviews work?

According to these two, they aren't a lost cause. They just need some major retooling to get any benefits out of a performance review. They shared some key findings on performance management during SHRM's Annual Conference & Expo 2021: 

• 57% of people felt like they were in competition with colleagues as a result of these reviews. 
• 18% of women and 25% of men reported crying as a result of performance reviews. 
• Annual reviews cause avoidance behaviours by feeding a fear of confrontation. 

They highlighted several shortcomings of traditional reviews. Specifically favouritism, inconsistency and recency bias. But Currence and Jackson also offered practical advice: 

• More frequent performance conversations.
• Train managers in proper coaching techniques. 
• Keep reviews and compensation discussions separate. 
• Use forward-focused questions rather than rehash criticism. 
• Abandon outdated rating scales. 

They also suggest calling them check-ins rather than performance reviews. They suggest checking in on a monthly basis. That's not as frequent as our own weekly check-in, but it's a step in the right direction.

2: McKinsey partner Bryan Hancock and senior partner Bill Schaninger

As McKinsey partners, Bryan Hancock and Bill Schaninger provide business clients with advice. They help employers to implement large-scale changes across their businesses with minimal disruption. Ratings especially are one of the most controversial elements of performance reviews. But, all the same, they believe performance ratings and reviews are still essential. McKinsey surveyed business clients who weren't satisfied with their reviews and went on to scrap them.

'In working with these clients, however, we noticed an interesting trend. When these organizations scrapped the performance ratings, they found a need for a form of annual documented administrative evaluation to make employment decisions, such as promotions and raises. To address this need, these organizations often implemented “ghost” ratings — a system of evaluation that is, ultimately, just another annual performance rating.'

"Ghost" ratings risk being further disconnected from employee performance. Effective performance management should reflect employee accomplishments. Otherwise, you can't be fair in how you reward people. The fact that these ghost ratings appeared at all means they provided an important frame of reference.

'Our experience suggests that, uncomfortable conversations aside, humans like knowing how they’re doing. It gives employees something to celebrate, or to focus on for improvement. And fewer touchpoints — i.e., getting rid of annual performance ratings — is not the answer.'

3: Author and business consultant Marcus Buckingham

Marcus Buckingham wrote a prominent piece for the Wall Street Journal a while back: "Annual Reviews Are a Terrible Way to Evaluate Employees". So, are there any benefits of a performance review? Three guesses what Marcus's answer is!

He talks about an employee named Gena. She enjoys the role, likes the company, and her login data shows she's a model employee. And yet she is now interviewing to leave the company she loves. Why? Because she's just experienced what millions of workers experience; the annual performance review. And she's been left so demoralized that she now wants to quit.

This highlights a major issue with overreliance on annual reviews. Lack of ongoing feedback forces employees to make assumptions. When those assumptions don't gel with what their manager says during a review, it's damages morale. So, what does Marcus Buckingham suggest?

'To maintain morale, stay connected to employees and avoid attrition, managers should check in with their reports every week.'

If you're interested in Marcus's written works, his talks, or research he's highlighted, check it out here.

4: Founder of LeadershipIQ, Mark Murphy

By now, you're used to hearing about the problems with performance reviews. But, according to Mark Murphy, we can't afford to do without them. So, do performance reviews work for everyone after all? Not exactly. Murphy is an advocate for reform. But he doesn't believe we should do away with performance reviews. But why?

'People with a high need for achievement seek to excel. Achievement-driven individuals thrive when they’re allowed to stand out and be great. They love being evaluated and graded, and frequent feedback helps them to monitor their progress.'

Murphy points out that, if you get rid of reviews, you need to replace it with something just as substantial. Otherwise your most driven workers get hung out to dry.

'If a quarter of your workforce is driven by Achievement [...], then how are those people going to feel when you take away their feedback? They’re going to be seriously unhappy.'

5: Zen Workplace's Karlyn Borysenko

According to Karlyn Borysenko, the problem with feedback isn't necessarily its regularity. The reason that critical feedback is so rarely effective is that it triggers people's fight or flight response. It's hard to take feedback onboard when you're struggling with an anxious reaction. To make matters worse, simply increasing the amount of positive feedback isn't the answer. Sandwiching positive and negative feedback just doesn't work. The short version is, employees, hyper-focus on one and ignore the other. So, what does Borysenko suggest?

While laying on the compliments may not work, the real answer isn't far off. The secret is that critical feedback should be growth-oriented rather than punitive.

'Remember that critical feedback leads to your sympathetic nervous system lighting up and sending you into a fight or flight response. However, when we focus on aspirational thoughts, the sympathetic nervous system stays nice and quiet.'

6: Gallup's Robert Sutton and Ben Wigert

Like McKinsey, Gallup is one of the leading organisations studying the workplace. In their article, More Harm Than Good: The Truth About Performance Reviews, Sutton and Wigert lay out some major flaws.

'Traditional performance reviews and approaches to feedback are often so bad that they actually make performance worse about one-third of the time.' No love lost here then!

And that's not all. Between resources and lost work hours, performance reviews get ridiculously expensive: 'As much as $2.4 million to $35 million a year in lost working hours for an organization of 10,000 employees to take part in performance evaluations.'

Performance reviews have carried weight as a professional standard for a long time. But between hefty price-tags and a lack of effectiveness, employers are moving away from performance reviews because of the lack of benefits.

7: Facebook is changing their long-standing approach to performance reviews

Yes, we're cheating with this one a bit, as Facebook is an organisation and not a person. But changes to Facebook's performance review system are due to take effect this year. And they make an interesting counterpoint to the trend of regular feedback.

Facebook previously reviewed employee performance every six months. In 2016, HR Chief Lori Goler explained their reasoning: "The business moves very quickly and our product moves very quickly, and if you wait a whole year, a lot of things have changed."

But, these days, Facebook employs almost five times the 12,000 they were responsible for eight years ago. Now, they're scaling back to annual reviews to reflect an increase in staffing and the uptake of remote work. According to spokeswoman, Tracy Clayton:' We are making this change to better reflect the direction of the company with remote work in mind and guided by our principles of fairness, simplicity and building for the long term.'

And an anonymous former senior employee told Business Insider, 'More than the process or logistics, it's what people want. When you're a start-up, you attract people who want to quickly course correct and change. Waiting a full year is great for average people.' But annual performance reviews don't benefit top talent or overperformers.

8: Microsoft's Chief People Officer Kathleen Hogan

Microsoft famously changed up their performance review system back in 2013. Their aim was to stop rating employees against each other.

'We really moved from a system that was a forced rating system, where 20% of folks had to get a 1 and 20% got a 2. And largely it was focused on your individual impact.'

Their current model moves away from this by assessing how employees collaborate with and support each other.

'What we really value is three dimensions. One is your own individual impact, the second is how you contributed to others and other success, and the third is how you leveraged the work of others.'

And this seems to have created a better work culture with more recognition: 'We're really recognizing people who were driving impact but were enabling others' success, as well as leveraging others, in the spirit of One Microsoft.'

9: Author and former Forbes contributor Liz Ryan

Do performance reviews work? Apparently not. In response to a letter submission, Liz Ryan posted a blistering takedown of performance reviews. We'll let some of her quotes speak for themselves: 'Performance reviews are not effective at improving performance. They have never shown their value as leadership tools -- but they make excellent power-and-control mechanisms, and that is one reason some companies have trouble giving up on them.'

Saying performance reviews exist to keep employees compliant might be the harshest criticism in this whole article. So, what's Liz's answer? Like many others, she advocates for timely feedback wherever possible:

'It doesn't help an employee move forward for a manager to tell them what they did well and did badly last year. If a manager needs to give someone feedback, they should do that in the moment — not months later.'

10: Founder of Clear and Open, Josef Shapiro

According to Josef Shapiro, performance reviews don't work. Part of it is their often annual nature. But, largely, it's because managers aren't doing them right.

'Managers make excuses to avoid uncomfortable conversations. “Well, I’ll wait to see if it’s a pattern,” they tell themselves, allowing the pattern to form. Or they say, “I don’t want to micromanage,” when it’s the small nudges that are most effective for course correction.’

So, what should you do as a manager to make sure an employee benefits from a performance review?

'First, periodically communicate to employees that compensation reviews and performance reviews are two completely separate processes. Second, give employees feedback often enough that nothing in that review would surprise them. If there is any surprise, that’s an indication you haven’t been as direct as you could be.'

So, there you have it. Ten people to listen to about performance reviews. As you can see, there are some strong trends. But it's fascinating to see how even experts disagree!

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