Performance Review: A Low Performer

Here’s an interesting stat from Ira S. Wolfe’s post Why Performance Reviews Fail:

As recently as 1982, sixty-two percent of the value of an organization was measured by its tangible assets. By 2002, nearly eighty percent of its value shifted to intangible assets

If ever there was a time to help your employees learn and develop it’s now. The value of your company depends on it. Here’s the problem: the performance review. Performance reviews don’t deliver performance and most organizations don’t have any other method to help their employees learn and develop. Here are my top 3 reasons from Ira’s article:

3.  When not provided regularly, annual (or even less periodic) reviews can be based on most recent performance, not performance over the course of the year. The results go both ways. Employees who put on their best behavior around review time get favorable ratings and the employee who has a bad couple of weeks gets punished.

We call this the recency effect. It’s been six months since you had your last performance review with John. A few months ago you noticed that he wasn’t properly following up with clients after a meeting. You told yourself that you’d mention it to him at his next performance review. John knows that review time is coming up, so he’s really cranked up his performance in the last few weeks and now you’ve forgotten about his previous issue. How does John get the feedback he needs to improve if you only meet twice a year?

6.  Annual reviews are really justification for salary freezes or smaller than expected salary increases. The manager might downgrade an employee’s performance feeling that with a high rating comes a demand for more money. Likewise, with a high rating, the employee might feel justified in requesting more salary or benefits.

People get defensive when the question of money and promotion comes into play. They’re less likely to admit to areas of weakness if they think it’s going to affect their pay. It’s no longer about improvement and feedback, but rather about balancing a compensation budget.

11.  “I really hate doing reviews but HR says I have to – so let’s just get it over with.” Performance reviews are scheduled because you’ve been told you have to do them.

If they’re hated by both parties then how is anyone benefiting? Checking boxes and writing generic comments is a waste of time. Worst of all both manager and employee don’t get feedback.

What do you think? Do you find the performance review helpful or are they just a waste of time and money?