Eliminate Performance Reviews!

Samuel Culbert interviewed on NPR.

Employee performance reviews should be eliminated, according to UCLA business professor Samuel Culbert. “First, they’re dishonest and fraudulent. And second, they’re just plain bad management,”

There’s also an excerpt from Culbert’s book, Get Rid of the Performance Review! He doesn’t pull any punches.

It’s time to finally put the performance review out of its misery.

This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who’s evaluated hates it. It’s a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus.

And yet few people do anything to kill it.

How could that be? How could something so obviously destructive, so universally despised, continue to plague our workplaces?

In part it’s because the performance review is all executives have ever known, and they’re blind to the damage caused by it.

In part it’s because few managers are aware of their addiction to the fear that reviews create amongst staff, and too many lack the confidence that they can lead without that fear.

In part it’s because HR professionals exploit the performance review to provide them a power base they don’t deserve.

And in part it’s because few people know an alter-native for getting the control, accountability, and employee development that reviews supposedly produce—but never do…

They fail to realize the most essential tool they have in getting quality performances is a trusting relationship with the people who work for them. It’s really that simple. If they understood this, there never would be something as stupidly one-sided as a performance review that is defined by domination by the boss.

As you know, putting an end ratings, rankings, and annual evaluations has been one of my personal crusades for some time.  Glad to have some company.

I suspect many managers would be happy to dispense with reviews.  But reviews are inextricably tied to another damaging practice, so-called merit pay.  So if we want to get rid of performance reviews, we have to get rid of the illusion of merit-pay, too.

A few ideas about what to do instead in an article I wrote a couple of years ago.

25 thoughts on “Eliminate Performance Reviews!

  1. Thank you for advocating putting an end to ratings, rankings, and annual evaluations.

    In my more cynical moments I’ve thought of performance reviews and so-called merit pay as management’s version of enhanced interrogation techniques – degrading & demoralizing.

    1. Degrading, demoralizing, take up a huge amount of time, and they don’t work!

      Yet, many people still defend them, or keep trying to tweak them so they work. Ain’t gonna happen.

  2. I hear you all. But how do you reward greater contribution and greater effort? And how do you set a up a defense against the unfortunate legal battles that would follow if ther is not a trail the explains merit raises?

    1. The first question is “How do you determine greater contribution?” In team-based, interdependent work, it’s difficult to impossible to distinguish the relative contributions with the precisions that’s implied by most so-called merit pay schemes.

      The second question is “How do you determine what ‘greater effort’ really is?” I’ve seen plenty of people who look like they are working really hard, or look like they are putting in long hours. But they only “look like.” It’s easy to reward the appearance of work, especially when manager are divorced from the real work.

      Both of these are difficult to reliably measure in interdependent, knowledge-based or team-based work. Further, there’s mounting evidence that so-called merit pay schemes do not deliver. See The Payoff in Merit Pay (Not).

      Merit pay doesn’t propel better performance. As a reward, it’s too little and too late to be effective in shaping behavior. In most companies, the differences in pay are actually pretty insignificant. Think about it: Assume that a person makes $100,000 (for the sake of easy arithmetic). A 3% raise is $3,000. A 2% raise is $2,000. That’s really not huge difference in actual dollars (considering the salary). But the perceived difference between 3% and 2% is huge, because it communicates how people are valued within the organization. In many cases the differences aren’t even a full percentage point, but a tiny fraction of a per cent. The resent effect is still there. (See It’s What We Know That Ain’t So.)

      It’s time to get rid of so-called merit pay, too. Some ideas on what to do instead in Performance Without Appraisal: Addressing the Most Common Concerns.

      As for lawsuits, there’s some evidence that people sue when they feel they haven’t been treated fairly, and they haven’t been heard. No amount of documentation from a cooked up performance ranking will help someone feel heard–quite the opposite. (And yes, I did say cooked up. Ranking on a bell curve or stack ranking results in cooked up performance documentation. In Abolishing the Performance Appraisal, Jenkins and Coens contend that in many cases, the documentation actually works against the company in court.

      There are people who are exceptional. We should treat them as exceptions, not impose company-wide systems that rely on faulty assumptions, don’t work, and demoralize and demotivate huge numbers of employees.

      We have to do something that is both more sane and more humane.

  3. One of Deming’s 14 points, IN 1950, was: “Don’t do annual performance reviews, they just make people feel bad.” See his book, “Out of the Crisis”. Toyota, the world’s largest car company, with more market capitalization than all other car companies in the world added together, took Deming to heart and extended his philosophy. Deming was right then, and 60 years later still is. I was just quoting him which is why I used his name instead of mine, which is Richard Karpinski.

  4. The stick is wrong because in induces fear while a major point of Deming was to drive out fear. The carrot is wrong because it focuses the mind on the reward instead of the job. What we REALLY want is ENGAGEMENT in the WORK, pride in doing a great job and making a great product that will please the customer. Anything that distracts from that is less productive. This news is not new.

    1. Hi, Richard –

      No, this is not new news.

      Deming said it years ago. Scholtes said it years ago. There have been a couple of books about it in the last few years. I’ve written dozens of articles and blog posts about it.

      But performance reviews and rankings are still pervasive, still demeaning and damaging. So I guess I’ll keep saying it.

      Thanks for stopping by.

  5. My concern (and admittedly performance reviews don’t even solve this) is how does one get around cognitive biases? As managers, we will never see anyone’s true performance, and I believe it is also impossible to assess an individual person’s contribution to a team. However, there will always come a time where one person will need to be chosen/ranked above another, and if you don’t go with a structured assessment, you go with your gut feeling which is oftentimes equally as flawed.

    1. I agree that performance evaluations don’t over come biases. But the do mask them, and hide them behind numbers and codes, which I guess are supposed to give the appearance of objectivity. Perhaps the makers of such schemes are banking on people believing the old (false) saw, “numbers don’t lie.”

      Can you give some examples of situations where one person must be chosen or ranked above another?

  6. I find these viewpoints intriguing, and based on the “normal” experience of performance reviews, ranking, and pay, I certainly can’t argue against that. However, I now work for a company that does do “performance” reviews, and while they do take up a decent amount of time (at least according to the folks who are writing them – I’m not quite there yet), I don’t feel they invoke the same level of pain as described.

    Our reviews are not relative to other employees, they are based on a matrix of position and expectations to which everyone has access. They are not solo endeavors of a single reviewer, and in the end, pay is based only on position – promotion is based on the review results, though other criteria do affect “major” promotions.

    I won’t say it’s perfect, but it seems to beat most (if not all) of the review systems I’ve ever seen. I’d like to hear your thoughts on the situation.

  7. What you describe does sound better than the typical review process. Two important points: 1) the criteria are visible and explicit 2) it’s not tied to a so-called merit pay system.

    So it seems like it could be used to help people assess where they are in their careers.

    A couple of questions. Are the review comments anonymous? Does this displace or replace regular, in-the-moment feedback?

    Interested in hearing more.

    ED

    1. The review comments are anonymous to the reviewee, but are requested and sent with full attribution to the reviewer, from people whom the reviewee identifies as the people they’ve worked with most closely over the last 6 months. It absolutely does not replace regular, in-the-moment feedback. The semi-annual reviews are in addition to project reviews, which are delivered at project’s end, or at least quarterly if the project is longer-term. Team leads are encouraged (and taught through internal training) to give feedback during a project, and teams often hold meetings – either post-project, or mid-project, depending again on length – to assess how they’re doing and how they can improve.

      1. Hi, Harper. Thanks for adding more information.

        How do you feel about this system? Does it result in better performance and improved morale?

        I have a wonder about what it would be like if the feedback were transparent, rather than anonymous.

        In my experience, when faced with anonymous feedback, people guess where it came from. When the feedback contains criticism, they wonder why the person didn’t say it to the directly–then there’s a chance to rectify the situation immediately. Waiting and putting a criticism in the formal record erodes trust.

        Sometimes they guess right, sometimes they guess wrong. In either case, it damages a relationship.

        1. Esther,
          From my personal experience, there hasn’t been a lot of guessing going on. When there were criticisms in my reviews, I had a pretty good idea of what was coming, and what I’d done to merit the criticism. The anonymity is useful in that if someone does have more generic criticism, then that won’t be directly attributed, and may not even come across as a direct criticism – the reviews are structured around the framework we have, and a reviewer is more likely to say “one area you may need to work on is … ” rather than “You aren’t good at … “. We certainly try to provide feedback on work, communications, etc. as close to the fact as possible, but review time is more about providing a holistic view of the “state of the career”.

          I think part of it is that we’re a small, but growing, company, and there’s a lot of emphasis on advancement. The review process, at the project and semiannual level, works to assess your career path more than your performance. Reviews basically ask two questions: “Are you doing the expected level of work for your position?” and “Are you showing the ability to do the next highest position’s work?”. If the answer to #1 is “No”, then there will be more coaching involved, and more effort by the reviewee and the company to get them on track. If the answer to #2 is “No”, then it’s up to the employee (utilizing official and unofficial mentors, where applicable) to step up to that level if desired.

          I won’t say there’s never been an issue with our process, but the only time I ever saw any mistrust or bad feelings occur was when negative feedback *was* accidentally sent to the person – and even that was fairly short-term. It would be interesting to see how a more transparent process would work, but I’m not entirely convinced that it would be better for team morale.

          1. So it sounds like the review process has a somewhat different purpose than the annual appraisal process has in many companies.

            It’s very interesting about the ill-feelings when criticism was accidentally sent directly. I suspect that the feeling was about “If you had a problem with me or my work, why didn’t you talk to me directly.” This is a trust issue. Anonymous feedback allows people to hide behind the review process rather than having uncomfortable conversations directly–which can actually build trust–and in a timely manner.

            I appreciate you for sharing information about the process at your company.

  8. Eliminating performance reviews policy should be studied first in a company. Further studies should be made and considered.

    1. There have been many studies of performance appraisals. Of the ones I’ve seen, all cast doubt on their efficacy, several which point to the damage they do.

      In-company “studies” of performance review policy usually consist of assessing which so-called performance management system should be used. Most of them rely on the claims of the vendor, maybe testing the user interface if it’s an automated system.

      These internal studies fail to:

      -challenge the fundamental assumptions behind the practice

      -assess whether the practices meets the stated goals of the policy

      -gather data about the time invested by managers and employees preparing for and going through the process

      -the unintended effects of performance reviews (e.g., on morale, gaming the system, competition, etc.)

      With the exception of counting the hours spent, these aren’t easy things to assess. Even if you only counted the hours, it would probably raise some questions.

      And lest there be confusion, fulfilling the requirements of a performance appraisal policy, filling in forms, and writing appraisal documents is *not* managing.

  9. Work that I have followed at a company called Vital Smarts basically says that 80% of all companies are in process of changing their performance systems. The majority of companies with the best employee engagement actually had no performance review system that they studied.

    But some companies the performance review system is in place and is not going anywhere. The question that managers have to ask themselves is can I meet the requirements of the HR department while at the same time make the performance review process a positive experience.

    It really isn’t a matter up to the company but rather each individual manager to arrive an outcome that meets both requirements.

    Key to all of this is that nothing said in the annual review should be a surprise. If there is then the manager is not doing their job. If a review lasts any longer than 30 minutes then something is wrong, or else you are not doing a review.

    1. I’m all for managers talking to employees about performance, when managers are aware of the part they play in creating an environment for excellent performance. Competent managers can do this without an HR mandate and an imposed process.

      Too often, managers focus on an individuals short-comings with out acknowledging their own part in an employees success or failure. Too often, it’s exercise that serves to reinforce the power imbalance in the relationship, without imparting useful information

      If competent managers can talk about performance without a performance review system, and the system doesn’t help poor managers, yet takes up everyone’s time, I have a hard time seeing why anyone should keep a performance review system. Better that HR train the managers how to give feedback in a timely manner, and managers learn how to create an environment for success.

      1. Thank you…you’ve hit on my number one issue about managers. Performance should not be discussed relation to what people don’t do well (short comings), but rather on what people do well.

        A manager’s #1 job is to identify each person’s unique talents/strengths/gifts, and figure out how to apply them within a team structure. Too often they are tied into role/responsibilities and not into finding what they do best and are passionate about. The problem here is that most managers don’t know how to do this, or are not given the time.

        Once you can make a link between a person’s passions and their productivity then you can have the performance conversation.

        1. Hi, Riley –

          I agree that narrow role and job definitions can get in the way. That’s mechanistic thinking and gets in the way of seeing the bigger goal (the outcome vs. “my tasks”) and stifles collaboration. Most complex work requires many skills–it doesn’t work to slice them fine and divvy them up.

          As for applying strengths, I see another option. Rather than have put all the responsibility on the manager, the team can organize their work (within certain constraints). That gives people a chance to self-select (again within constraints, such as not creating bottlenecks or raising the truck factor), and to work outside a rigid job description.

  10. Performance reviews allow managers to hold employees “accountable” (the new buzz word–read “blame”)) for stuff they (the employees) mostly don’t care about. Adults are not prancing horses to be graded on “performance” in the ring. HR in most companies is on a power trip and administering these reviews ensures the continued employment of managers and HR personnel. The other trend is for VitalSmarts (mentioned in a earlier post) and other companies to sell interpersonal skill courses like “Crucial Conversations”–which should be called “How WASPs talk to each other.” Has nothing to do with how Hispanics, Asians, Italians and Jews, among others, talk to others or relate. Just another psychobabble scam. Others are Influencer courses, from the same company, and the use of the phrase “above the line” or “below the line” thinking or behavior (Johnny, you’re below the line, go to your room). When will these companies treat us like adults? Glad I’m recently retired.

  11. A job well-done is its own reward! Dispose the “gold stars/M&M’s/everyone wins a trophy mentality”. You come to work to perform a function and get paid for your output. Continuous feedback eliminates the need for reviews.

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