Do Performance Reviews Have to Suck?

Do performance reviews have to suck?

It’s a question many people seem to ask. I was recently at a conference for organizational leaders, and I went to a session in which the leader and most of the participants worked themselves into a frenzy trashing performance reviews. I was screaming inside but I didn’t want to derail the meeting, which was supposed to be focused on improving team performance. Not speaking up at the time was a mistake, but it has forced me to write about this critically important subject.

Performance reviews are not small tools to assess individual performance. They are large tools that impact the capacity of an organization to have the effect that it intends in the world.

If everyone is not looking forward to the review, then you’re doing it wrong.

If you don’t have patience for the whole story, here’s the brief answer to the question of whether performance reviews have to suck. Emphatically no. Performance reviews do not have to suck. Quite the contrary: they should be a gift and an inspiration. If everyone is not looking forward to the review, if it is a cause for apprehension (or even dread), then you are doing it wrong. Your business, your organization, your mission, your success—all are suffering as a result.

Performance reviews are hard to do right, but they should not be eliminated or replaced. I have seen an array of performance review schemes and practices. Many of them are heartbreakingly bad. It’s no surprise that the collection of organizational leaders at this summit were clamoring for an alternative. The best-received suggestion in my session, by the way, is one I have heard often: can’t we just give in-context feedback and continual mentoring instead?

Yes, we should do that. It’s absolutely a good thing. But it is not a replacement for formal performance reviews. There are at least four reasons why I say this:

1. The theory of continual review and mentoring is hard to realize in practice. In fact, it’s likely to diminish over time and eventually not happen at all. More often than not, a formal process that forces the task periodically is required.
2. A looser structure of continuous feedback is unlikely to require—and even less likely to encourage—lateral and bottom-up feedback. This is a key requirement of a well-conceived performance review as we describe below. Without this, the review is a tool of management rather than organizational improvement.
3. In this model, it is likely that things will be left out and difficult topics will be avoided. It is just too easy not to ask hard questions and individual discretion will yield a wide range of effectiveness and thoroughness. I strongly believe consistency is desirable.
4. The performance review can and should be a subject of continuous improvement. A more formal process allows this to be done thoughtfully and systematically.

How to know if you are doing performance reviews well

It’s simple: do your direct reports ask you to do performance reviews more often? If so, you’re doing them well. If they are not asking for more, you’re probably either doing damage or doing nothing.

Harsh? At the conference, the pressure to find any excuse to avoid doing them was palpable. This was a clear indication that few, if not none, of the companies represented were doing any good with their reviews.

Quality time

Formal performance reviews are a habit that requires discipline and dedicated time. This is time that is not explicitly productive in the near term. It is the “important but not urgent” time that is so easy to neglect. See a version of the Eisenhower Decision Matrix popularized by Stephen Covey below:

So while informal alternatives seem attractive in theory, they are misguided in practice because they create a loophole that most managers will naturally fall through. There is just too much “important and urgent” stuff that needs to get done. An informal process will inevitably get diluted or skipped except in rare cases where the cultural imperative is exceedingly strong. Formal performance reviews should build a habit of dedicating time away from the routine and the hubbub of daily pressures. This should be treated as important, even sacred time. It is a rare opportunity to reflect, empathize, learn, and focus on innovation and improvement. This is work that is too easily squashed by the pile of the urgent and important tasks. Does this not sound familiar?

Do what you have to in order to find this time and make it work for yourself, your direct reports, your team, and your whole organization. Failure to do so would be a lost opportunity that shortchanges everyone involved.

360 review

The default interpretation of performance reviews is that they are a tool of management or HR. This is flawed. Treated this way, it’s likely that they are doing more harm than good in the organization. A performance review should be 360: I evaluate my direct reports, but I also give them the opportunity to evaluate their colleagues, and most importantly, to evaluate me. A good performance review should require a direct report to seriously address the question, “As your team leader, how am I doing serving you, your team, and the organization?” This question is key. If you cannot honestly ask it or if you cannot get honest feedback, it is a flashing red sign of an acute problem. The insights from below regarding management’s performance and organizational effectiveness must have a safe venue to be communicated. Effective teams trust each other enough to have constructive conflict, they share commitment to decisions made, and they hold each other accountable in the achievement of shared goals. This chain of dependence, support, and accountability must go up the organizational hierarchy at least as strongly as it goes down.

The fundamental purpose of a performance review is to build trust, commitment, mutual accountability, and ultimately, the motivation to achieve collective organizational results.

The fundamental purpose of a performance review is not control. It is the process of building trust, commitment, mutual accountability, and ultimately, the motivation to achieve collective organizational results. Performance reviews should be a motivational team building tool that actively contributes to an organization’s transition from good to great.

Face the pain

I know from experience that if I am avoiding a performance review, then I am really avoiding some significant unresolved issue. The dread I feel is a symptom of something holding back the team, and the longer it is left unaddressed, the worse the implications are. But I also know that given the opportunity, I will avoid addressing the issue for as long as I can. The habit of addressing painful issues or smoldering conflicts is difficult and against most people’s instincts. One key role of the performance review is to force them out into the open. It’s hard, but if you as a manager are always operating in your comfort zone, that’s a problem. You are not doing your job.

Approach the uncomfortable topic and allow the time for the issue to be properly aired. Hopefully, you have shared values that are already established to adjudicate the resolution of conflicts that arise. That’s an essential tool in this process (for more on that, read Ben’s post on the importance of a small set of Core Values).

Performance reviews and compensation

The most common practical reason for having performance reviews is to assess compensation and clear the way for pay raises. This makes the review process fundamentally tied to a rewards and punishments scheme that is primarily a tool of management—a means of coercion and control. I advocate decoupling or at least distancing performance reviews and compensation. I see the performance review as a tool of leadership: how is the team leader enhancing the capacity and performance of the team? How is she getting them to see the bigger picture, make more of their natural talents, achieve things they did not think possible? The performance review should be part of that work. The performance review should be part of a necessary evolution of management practice toward leadership practice. This form of leadership is required at every level of an organization, not just at the top, and a key responsibility of these leaders is to facilitate team well-being and team performance. The team leader must elevate the team; she must serve to assure they can do more and be more than they could through individual contribution.

If there must be a compensation component of the performance review, it should be connected to team performance and team goals rather than individual ones. As Amy Edmondson points out in her excellent book Teaming, organizations thrive or fail to thrive based on how well the small groups within those organizations work. That means that the basic unit of focus should not be the individual but instead the team. The performance review should, therefore, serve to improve team performance.

Performance reviews are not small tools to assess individual performance. They are large tools that impact the capacity of an organization to have the effect that it intends in the world.

Performance reviews done badly

Poorly designed and poorly executed performance reviews are damaging. They create confusion, anxiety, and resentment. They provide little or no insight and are a waste of time. The symptoms of this were all over the conference discussion I was in. It was demotivating for employees and managers alike. This is exactly the opposite of what a performance review should be. This situation is not universal. Clearly, there are organizations that do this well. My fear is that they are the exception rather than the norm.

Performance reviews done well

Done right, a performance review should do all of the following:

• Inspire both the employee and the manager (who has responsibility as a leader)
• Deepen relationships and collaborative capacity among team members
• Provide insight into the attitudes and plans of team members, allowing for better planning and more effective cooperation
• Generate ideas on how to improve processes and policy
• Bring team members into closer alignment with organizational values and objectives (and reaffirm alignment over time)
• Provide a safe outlet for the frustrations, miscommunications, and misalignments that inevitably arise from time to time
• Connect daily activities to the mission and values of the organization, enhancing a sense of connection and higher purpose
• Encourage setting goals toward the achievement of personal mastery and team performance
• Afford the means for feedback that allows the manager/leader to improve
• Help the manager understand weaknesses in the team and any interpersonal or interdepartmental issues that need to be addressed
• Finally, the kicker: performance reviews should increase the bottom-line effectiveness of individuals and teams and therefore, the bottom-line value of the whole organization.

All that?
Yes, all of that.

When are you going to start doing performance reviews right?

Our template

We use a performance review structure that has proven effective for us and for our clients. Everyone who works for the company, who should be working here, asks for it and they are disappointed when we do not schedule them frequently enough. The opposite is true for employees who do not belong or are damaging to the business. The performance review is understood as an opportunity to reflect and improve and to become re-inspired with their own work, their team’s work, and the work of the organization. It reaffirms the value of their individual contributions and the connection of those contributions to the success of their team and the entire enterprise. It’s deeply satisfying to see personal and team goals achieved and long-term plans materialize, reminding each team member of progress over time.

Our performance review template also takes pains to reaffirm the organizational culture and values. This improves the operational effectiveness and cohesion of the team and helps align the team with the larger objectives of the organization as a whole.

Do you want this for yourself?

You can download the template we use. This is one of the ways we believe we are able to help our clients make the world better. We encourage our clients to use it as a way to follow up on organizational alignment work that we may have done. It reinforces that work and allows the effort to be sustained. It is a means to remind every employee of their responsibility to continue to pursue the operational and behavioral improvements that are essential ingredients for success.

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Blog illustration for Tronvig by Sage Einarsen