In an excellent interview with Mark Graban, Professor Samuel Cuthbert of UCLA has this to say about the performance review:
Performance reviews, in my mind, are a dishonest, fraudulent practice carried out and justified on grounds I have no idea, they never hold any water and they work against everybody.
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It sounds at first like hyperbole…that is, until you realize that he has been studying this the performance review for decades and has quite a case to make. Here is my summary:
- The performance review “pretends to be objective” but bosses are subjective and tend to reward people who are like them using metrics that employees don’t have in mind while doing their jobs.
- The performance review encourages managers to act dishonestly by claiming to be objective and/or aware of their own predispositions and preferences.
- The performance review encourages employees to spend time pleasing their bosses and, I (Amiel) would add, their boss’s peers and boss’s boss.
- The performance review distracts attention from what should be the main focus of managers: improving results, not personality attributes.
- The performance review is anything but meritocratic. Instead, it is used to justify the raises that bosses want to give certain employees. First comes the decision to give a raise and/or bonus, then comes the review to justify it. “It’s the tail wagging the dog.”
- In companies like GE that rank employees, 70% get called average. Would you like to be called average?
I’d like to add a couple of points. As I wrote about in my first book, Practice Greatness, the performance review is incredibly wasteful:
Ranking systems also waste extraordinary amounts of time. As a manager you spend time proposing rank orders and debating them with others. You spend time worrying about how you’re going to explain to a perfectly competent employee that they are below average. You spend time meeting with employees. And you spend more time in subsequent weeks and months dealing with the emotional fallout.
How about everyone else? The biggest time sink here is the effort it takes to position yourself with your boss, your boss’s boss, and your boss’s boss’s peers. Looking good gets rewarded more than doing what’s good for the company. Any new idea that challenges others’ perspective or status also threatens your own compensation and job security.
And then there is my favorite critique of ranking systems, courtesy of Professor John Boudreau of USC:
By definition, continually removing or improving the bottom 10 percent will make the bottom 10 percent more similar to the middle 70 percent and thus make removing the bottom 10 percent less effective in improving workforce quality
Professor Cuthbert suggests getting rid of the performance review. I couldn’t agree more. Think of this as tearing down the Berlin Wall. Seems impossible for decades—and then it happens…and so many possibilities open up. It’s that big a deal.