Ditch Performance Reviews? How About Learn to do Them Well?

Few activities in a workplace polarize like performance reviews. Some see them as subjective and ungrounded, one-sided and boss-dominated and something we should do away with entirely, an opinion put forth most recently in a Wall Street Journal article. Others find them an invaluable tool to develop employees and move the company forward.

Our view? Yes, performance reviews can be dysfunctional, but they need not be. Research has suggested that in two-thirds of cases, performance feedback elicits improved performance. Not only can reviews help employees recognize their strengths and developmental needs, but, if done well, can boost their motivation. Should we abandon performance reviews? Absolutely not. Should we learn how to do them well? Absolutely.

To learn to conduct performance reviews well, you need to know the key reasons they are so challenging, frustrating, and yes, generally disliked. Then you need the tools ā€” specific suggestions for both appraisers and appraisees ā€” to overcome these challenges and conduct an effective review. Based on decades of scientific research and our own field research on the role of feedback in leadership development, we’ve identified the following key challenges and solutions to the performance review dilemma.

The three challenges:

1. Cognitive bias. A central cognitive bias is the fundamental attribution error, wherein we attribute success to our own traits and abilities, and blame failures on external circumstances. Thus, you may think, “I led project A to successful completion by being entrepreneurial in finding the required inputs, but project B failed because we lacked an executive champion and enough resources.” This attribution, however, reverses when we think of others.

2. Sugarcoating the negative. We all want to be liked, and delivering negative information straight-on runs counter to this desire. Such sugarcoating, however, distorts the very nature of feedback, making it difficult for appraisees to properly adjust their behavior. Appraisers can also fall prey to the illusion of transparency when they believe that their thoughts and assessments are absolutely clear to the appraisee, while in reality they are not. Appraisees, in turn, risk the overconfidence bias. In other words, we generally think we are better than we really are.

3. Lack of preparation. For an effective performance review, both should have a full record of the employee’s activities. If you lack those records, research shows you will base your evaluations on the most recent or salient events, which are more readily retrievable from memory. The odds of such an evaluation being comprehensive and unbiased are quite low.

So those are the biggest and most-consistent challenges to performance reviews. So how can you do them well? We’ve identified four key things to remember.

1. Create an open, two-way dialogue. This responsibility lies with both the appraiser and the appraisee. As an appraiser, you can open the review by asking, “So, Lisa, how do you think you are doing?” In a manager-subordinate appraisal, giving the subordinate the initiative at the outset could be important in leveling the playing field and ensuring an open communication process. It is Lisa’s responsibility, however, to come prepared to engage in such discussion. She should have a summary of the projects, tasks, and initiatives in which she was involved and be prepared to discuss her performance. Remember that performance reviews are not just the times when you mindlessly endure others’ evaluating you. It is foremost an opportunity for you to reflect on both performance and potential and emerge a better employee. As a manager, you can help Lisa better prepare for this discussion by asking her to fill out some variant of a performance self-assessment form.

2. Reduce the subjectivity. Many reviews entail some degree of subjective evaluation, but eliminating the subjectivity where possible is key. Some helpful practices here could include direct peer-to-peer comparisons. For example, ask yourself, “How would Lisa compare to Mary?” You can also think of ranking your employees or forcing a distribution. Do not procrastinate on making such assessments and ensure you are rating a manageable number of appraisees. Rushing the process or rating too many people is guaranteed to distort your judgment. Another way to mitigate the downsides of subjective assessment is to consider multiple perspectives. Today, many companies are effectively using 360 evaluations, in which subordinates, peers, and managers all contribute feedback.

Also, use concrete events or behaviors to support your evaluations. A general comment such as “I think you could be putting in more hours” is neither well supported nor impactful. A statement such as “I would have liked to see you around on the two weekends in April when we were finalizing the partnership contract for client A,” however, is both clear and substantiated. To do this during a review, many effective managers keep a folder (paper or electronic) where they file performance-related information for each employee throughout the year.

3. Give constant feedback. Don’t wait for the official performance review period to give or receive performance feedback. In many companies, official reviews happen only once or twice a year. If the employee is not doing well, he or she should not have to wait half a year to find out. Catching undesirable behaviors earlier allows you to correct them more easily. Likewise, encouraging good performance quickly can provide an additional motivational boost.

4. Balance evaluation and development. It’s well known that as humans, we have a hard time accepting criticisms, even if they are constructive. As people get emotional and upset, it becomes incredibly difficult to engage them in creating a developmental plan. A useful practice here is separate the review and developmental sessions over time. So, when opening a review meeting, set the ground rules by noting that today you will discuss performance and next week you will meet for a developmental follow up. This will give the employee time to digest the feedback and think of the ways to use your help down the road.
Maxim Sytch is an assistant professor in the Department of Management & Organizations, Stephen M. Ross School of Business, University of Michigan. His research focuses on how networks of collaborative and conflictual interorganizational relationships emerge and subsequently shape firms’ behavior and performance.

D. Scott DeRue is the Banc One Corporation Assistant Professor of Business Administration at the University of Michigan’s Stephen M. Ross School of Business. His research focuses on how leaders and teams in organizations adapt, learn and develop over time.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: