….. It’s Time for the Annual Performance Review

Vague statements and labels, one-sided evaluations, surprises, and secondhand complaints are just the sorts of things that can make a person want to run away screaming from an annual performance evaluation–probably not the best career move. Here are some tips for dealing with these situations in a calm and collected manner.

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It’s that time again: the ritual of yearly appraisals and performance reviews. If you’ve followed my writing, you know what I think of yearly appraisals and performance reviews. And, you know that the data is on my side.

Still, the vast majority of companies still mandate some form of annual review with ratings, rankings, and bell curves. Except for people who receive top ratings, these reviews can be discouraging, demotivating, and soul-destroying. But, refusing to participate is a career-limiting move.

Four of the most destructive dynamics in reviews involve vague feedback and labels, one-sided assessments, surprises, and second-hand complaints. I hope that your review doesn’t go down that road. But, in case it does, here are strategies you can use to hold on to your dignity and obtain some useful information.

Vague Statements and Labels

Several years ago at about this time of year, I was talking to a group about feedback. One woman shared that she had just had her annual review and received a below-average rating because, her boss said, she was “too nice.”

I’m sorry, but that isn’t useful feedback; it’s a label. There was no way for the receiver to act on that label, other than to start being mean. If your boss uses a label to summarize some aspect of your performance, ask for examples. But, do so carefully, so that your boss doesn’t infer that you are challenging his assessment.

Start by creating an opening by saying something such as, “I’d really like to learn more about that perception, so that I can decide what changes will be most effective in this area. Can we set up a time to discuss specific examples?”

If your boss says no, you’ve got bigger problems than a useless label. Fortunately, it’s unlikely he will respond that way. It’s more likely that your boss won’t have those examples at his finger tips and may need time to think back over the situations that led to his conclusion. Pressing him during the review may make him feel defensive and lead him to label you as resistant–downward spiral, here we come!

When you do have the opportunity for further exploration, ask for recent examples. You need enough information to allow you to recognize and remember the situation. Once you have data that you both agree on, ask to understand how your boss sees your actions affecting your ability to do your job. For example, the too-nice lady might have asked, “How do you see my style getting in my way?” or “How did my style affect my credibility or ability to do my job in the situation we’re talking about?”

Part of everyone’s job growth is developing a greater repertoire of options for action, so ask for some coaching while acknowledging the data. “Yes, I did do that. At the time, I didn’t pause to consider other options. Will you help me think through some other alternatives that would have been more effective?”

One-sided Evaluations

If your boss makes an assessment that you feel doesn’t cover all the facts of the situation, add more information.

Excuses don’t sway most bosses. But, when there are circumstances beyond your control that affect your ability to finish assignments, your boss should take them into account (and work to correct the situation so you can succeed).

It’s almost never a good strategy to argue with the ref, so start by acknowledging what is accurate in your boss’s assessment. You might say something such as, “I can see how that’s a problem, and I’m not making excuses. I would like to share some more information about how that situation came about.”

Share additional information in as neutral a way as you can, and avoid blaming other people. After you’ve laid out the data, own what you can about the situation. Maybe you didn’t raise the red flag to indicate there was a problem early enough. Maybe you didn’t consider more than one option. Whatever it is, if you can own your part of the situation, your boss will see that you aren’t trying to shift the blame.

Then, move to problem solving by making an opening such as, “I would like to discuss how to handle the situation should it arise again.”

Surprises

One of the worst things a manager can do in an annual review is spring a surprise on you. But, sadly, some managers wait until the end of the year to tell people about a problem that’s festered for months.

If this happens to you, acknowledge your manager’s point of view and the importance he puts on the situation. You won’t be able to bring your best thinking to the situation when you are caught off guard. Ask for a follow-up meeting within the next week, so that it’s clear you aren’t trying to brush off the concern.

Secondhand Complaints

Bearing secondhand feedback is a sure way to erode trust. But, some so-called performance-management systems rely on it, and some managers fall into the trap.

Vague or puzzling secondhand feedback presents a problem similar to vague labels–you don’t have enough information to make a choice about what to change. Use a similar opening: “I’d like to learn more about that perception. Can you arrange for me to have a follow-up conversation with the person who gave that feedback?”

If that fails, ask if your boss shares the assessment from the anonymous source, and seek clarification from him.

If the secondhand feedback is a complaint about the way you do your job, ask your boss to arrange a meeting so that you can repair the working relationship.

Most people are open to feedback when they believe that the source is reliable, the receiver trusts the giver’s intentions, the receiver has a chance to clarify, and the process–both how the feedback is developed and how it’s delivered–is fair.

Too many annual reviews violate some or all of these principles, but if you use the strategies in this column, you can restore some of the balance and gain helpful information.

©2007-2010 Esther Derby

The idea of merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for;motivate people to do their best, for their own good.

The effect is exactly the opposite of what the words promise. Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser.

Merit rating rewards people who do well within the system. It does not reward attempts to improve the system.

W. Edwards Deming in Out of the Crisis

In an earlier column, I suggested that ScrumMasters should steer clear of annual performance reviews. Rating and ranking individuals interferes with a ScrumMaster’s responsibilities as a coach in service to the team. In fact, I went further than that: I suggested that managers and the rest of us steer clear of performance reviews, as well.

My suggestion does run counter to widespread practice. But I’m not alone in questioning performance evaluations and rankings.

W. Edwards Deming identified performance appraisal as one of the Seven Deadly Diseases of Management. Deming is clear and concise in stating the negative effects of performance appraisals and merit ratings: “It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics.” [Deming p. 102]

More recently, Stanford University professors Robert Sutton and Jeffrey Pfeffer combed through data and studies related to widespread management practices. They reference a survey of 200 human resource professionals which reports that forced ranking—a common component of performance appraisal programs?results in “lower productivity, inequity and skepticism, negative effects on employee engagement, reduced collaboration, and damage to morale and mistrust of leadership.” [Pfeffer and Sutton, p. 107] They go on to describe the damage done by merit pay plans.

In short, the evidence supporting the benefits of rating, ranking, and then tying pay to the rating—the stuff of performance evaluations—is thin to none. Deming had it right.

My readers did raise legitimate concerns:

Without performance appraisals…

How do we determine how much to pay people?

How do we know who to promote or fire?

How do people know they need to improve?

Organizations do need answers to these questions. Performance appraisals and pay-for-performance (PFP) aren’t the only way to answer those questions, or even the best way. In this column, I’ll walk through some alternatives to the prevailing practice.

How do we determine how much to pay people?

One reader pointed out, “people get their salaries on an individual basis.” True. Tying annual salary actions to ratings and rankings is just one way to determine what those actions should be. There are other rational and non-capricious ways to adjust individual salaries:

• Adjust based on the cost of living so that the buying power of salaries keeps pace with economic conditions.
• Allow all employees to share in the company’s success through profit sharing.
• Adjust salaries based on the current market rate for skills and roles.

Another reader posed the rhetorical question, “So all certified scrum masters earn the same amount?”

Performance is a function of the person and the environment. Systems thinking and lean production at Toyota tell us that gains in productivity come from inspecting and adapting the system, not from focusing on individual performance. An improvement mindset, thinking for the long term, eliminating waste, respect for people, and removing impediments bring high performance.

Still, there are people who are clearly outstanding performers (both outstandingly good and outstandingly poor), who outperform the limits of the system. Once again, pay increases based on performance ratings is only one way to accomplish the goal of recognizing outstanding individuals.

People—and their jobs—evolve over time. A ScrumMaster may start off coaching a team on the basics of Scrum, and over time, take a bigger role working on systemic issues that hinder the team. Or he may develop exceptional coaching skills. If someone is truly performing above others within the same job it may be time to promote him or reclassify his job so that it’s at a higher pay level.

How do we know who to promote or fire?

Other readers asked, “Without yearly ratings, how will we know who to promote?” Looking at how a person has evolved in his job and the level of responsibilities is one way. Another option is to treat promotions as

seriously as hiring: create a rigorous internal application process that involves interviews and auditions.

The truth is that many outstanding performers aren’t doing it for the money. They stay for love of their work and are most rewarded by new and challenging assignments.

The reverse question came up, too: “How will we know who to fire?”

It doesn’t take a rating to fire someone. If someone isn’t doing his job, there’s no reason to keep him on the payroll until the annual review cycle comes around. A ScrumMaster will know when someone isn’t doing his job or is making it harder for other people to do their jobs. He can coach the person, or if coaching is not or is no longer an option, work with a functional manager to move the person off the team. (Some teams manage their own team membership, and people who need to go move off the team, without a manager’s involvement.) And, poor performers will hang onto a job even if they aren’t receiving raises. They won’t be improving, though. They’ll be harboring resentment and telling themselves that they really are above average.

As with identifying outstanding good performers, consider the environment, as well as individual skills. Ask whether someone is truly underperforming, or whether the system is limiting his performance.

I spoke with a new agile coach recently who was beginning to doubt he was in the right role. “I just can’t get this group moving in the right direction,” he said. “Maybe I should go back to being a developer.”

When he described the situation to me in detail, I began to wonder if any new coach could move this group in the right direction. The project has several stakeholders who disagree about the direction of product. The team is split into three factions, which swirl around a long standing conflict between two team members. One member of the team is skeptical of agile methods and baits the coach at every opportunity. When he’s not baiting the coach, he’s working to bring other team members to his point of view. The new coach is struggling in his job. The person who is supposed to mentor him is missing in action. I don’t think firing him—or giving him a low rating—is the answer.

It would be more fruitful (and more difficult) to look at the system that assigned a brand new coach to this project and failed to provide support.

How do people know they need to improve?

How will people know they need to improve if they don’t have an annual review? The answer to this question is simple (though not easy): their ScrumMaster will tell them.

A letter or number rating or ranking is an evaluation. It may tell someone he needs to improve, but it doesn’t tell him what specifically he needs to do differently. In order to improve, people need clear behavioral descriptions and they need to understand the impact of behavior or results. Some managers provide specific examples along with the letter or number evaluation grade. However, most humans resist labels, so they may be busy with the emotional response to the rating, and not ready to fully listen as the manger gives examples.

Scrum runs on frequent feedback loops. That includes feedback to people on their work interactions and work results. Feedback on an annual cycle is worse than useless and is totally out of congruence with agile methods.

When organizations adopt Scrum, sooner or later they bump up against the problems caused by asking people to work collaboratively and then measuring and rewarding them for individual effort. But Scrum is all about making issues visible, so we can inspect and adapt. The time has come look at the evidence about pay and appraisal systems. We may want to succumb to the allure of the “merit pay” words, but performance appraisals are a barrier to delivering valuable software; it’s time for them to go.

Further Reading

Out of the Crisis. W. Edwards Deming

Hard Facts, Dangerous Half-truths and Total Nonsense: Profiting from Evidence-based Management. Jeffrey Pfeffer & Robert
I. Sutton

An Alternative to the Yearly Performance Review by moi.

Should a Scrum Master Give Performance Appraisals by moi.

This article first appeared on scrumalliance.org.

(c) 2007-2010 Esther Derby

A ScrumMaster recently asked me if he should take over responsibility for year-end performance evaluations since he was closer to the work than the functional manager for the team. It’s not the first time I’ve heard this question, and as more companies begin to use Scrum, I’m sure I’ll hear it again.

It does make sense for a ScrumMaster to give feedback. But when it comes to taking over (or participating in) the annual appraisal, ratings, or rankings, my answer is “No. No. No!” There’s a fundamental conflict between coaching to improve effectiveness and evaluating for ratings, rankings, raises, or promotion.

Yearly appraisals, performance reviews, and evaluations emphasize hierarchy and differences in status. ScrumMasters are in service to the team; they don’t manage the team. Creating a higher status position (evaluator) is an impediment to the team self-organizing—and to the team learning how to give each other feedback and manage their own performance.

People who receive high ratings may bask in the glow of affirmation. However, psychologists know that 80 percent of people believe their performance is above average. Statistically that can’t be true; yet, on an emotional level, that is what most people believe. When people receive a lower rating (or an unexpected rating), they focus on the reasons they deserve a better rating. That impedes honest discussion about skills and behavior.

A number or letter rating doesn’t provide sufficient information for a person to know what or how to change. Even when the rating or ranking is followed by a description of specific behaviors, the person on the receiving end is focused on “the number,” (and the reasons they deserve a different number). That’s a barrier to improvement.

When people only have serious conversations about performance once a year (or even once a quarter) it leaves too much time for problems to fester. Why let a problem continue? Why suppress team productivity? When a team member is doing something that’s detrimental to the team, the time to tell him is now. When a team member’s work isn’t what it needs to be, the time to tell him is now. When people receive that information long after the fact they wonder, “Why didn’t he tell me sooner? Doesn’t he want me to succeed?” That erodes trust, and trust is a prerequisite for effective coaching.

Participating in individual rating telegraphs the message: “I say we’re a team, but I don’t really mean it. I’m still looking at individual performance, not team accomplishment.” That undermines the ScrumMaster’s role in improving productivity, helping the team self-organize, and improving the life of the team.

“But,” you may say, “the ScrumMaster is closest to the day-to-day performance of people on the team.”

That’s true. So, by all means give feedback on day-to-day performance and patterns of behavior. Provide clear, specific information about what you observe. Help people understand the impact their behavior and work results have on the team. That’s information that will help team members make choices to continually improve their skills, professionalism, and contribution to the team. By all means, coach people as they learn new skills. Help the team learn to self-organize by holding up a mirror on their processes and challenge them to think and decide on their own.

The ScrumMaster and team members know how each other are performing. When the ScrumMaster and the team are committed to giving each other congruent feedback, there’s no need for a performance evaluation: people know how they are doing and are working to improve every day.

What can you do if, as a ScrumMaster, you are pressured to provide input for a performance review? Explain that you have been giving feedback throughout the year (or quarter). Give examples of how you have provided feedback and seen changes day-to-day (without naming names).

Don’t provide feedback for the manager to pass along, even if it’s feedback you’ve already given to the other person. The manager won’t have the context to provide clarification or answer questions. “Pass along” feedback—especially when it’s new information—creates a tattletale dynamic. The recipient of pass along feedback wonders why the ScrumMaster didn’t give the feedback directly, and that damages relationships. Explain to the manager that everything that needs to be said has already been said directly.

Explain that the work is interdependent, so it’s impossible to pull apart individual contribution. You are focusing on improving the performance of the team and that individual performance evaluation will detract from that focus.

Create a team performance review where the team members discuss how the team is doing and where the team needs to improve. Do this as a face-to-face discussion, not through anonymous comments or ratings (I’ll say more about how to do this in a future column). Provide the team’s own assessment of their performance to the manager. The manager can then choose how to apply that assessment in the mandated performance appraisal process.

Managers believe they must engage in the ritual of annual evaluation—because they’ve always done it. HR may have targets for percentage of reviews completed. Neither has a thing to do with actually improving performance. Individual performance evaluations and annual reviews are an impediment. Steer clear of them—they are a vestige of command and control that Scrum can do without.

This article originally appeared on scrumalliance.org.