Is performance management really a necessary evil? Is it a “must do” because in most companies it’s so closely entwined with other HR systems? Perhaps so – but here’s a few reasons why it shouldn’t be:

1. Inconsistencies in manager ratings

Although purported to be based on objective data, performance ratings are subjective. Because of this manager differences will always be present. One manager may rate “harder” than another, for the same level of output, behaviour and or effort. Conversely, some managers don’t like to cause waves and so will rate everyone the same, or not distinguish poorer performers from their better performing colleagues.

2. Ratings can be adjusted based on the size of the bonus pool.

Much to management’s chagrin, it’s no secret that ratings are influenced by the money available in that year’s bonus pool. This influence can be conscious: “We can only have 12% of the population achieve an outstanding rating this year”, or unconscious: the messages about cost consciousness come through loud and clear to managers who respond by limiting the numbers of people rated  highly

3. Managers aren’t good at honest conversations

In most cases the appraisal conversation is an opportunity for your manager to help you understand where you have under-achieved (thanks, really….). The reality is that most managers aren’t good at having frank and honest conversations that help to improve performance. They either

• don’t tell you the truth, for fear of facing a challenging personal reaction, or an actual debate, or
• hit you like a ton of bricks with their explanation of your failures.

None of these methods has been shown to improve individual performance, and does in fact, decrease engagement and satisfaction.

4. The power is all one way

No matter which way you look at it, the performance appraisal always consists of a subordinate being assessed by their superior. This relationship power is never openly stated or discussed, but it always true. So it’s not an even playing field where two adults can equally debate issues. It’s a loaded one where the subordinate wants to say and do the right things to support their career, and the manager has the final say about what the performance was like. We can try and soften the edges of this in all sorts of ways – getting feedback from customers, encouraging disagreements to go up the line etc – but at the end of the day, those in power will always have the final say. It’s been that way since the dawn of time.

5 .Performance Appraisals focus on the wrong things

Numerous studies show that telling people what they did wrong is much less effective in lifting their future performance than recognising their strengths and acknowledging good outcomes. So the basic premise for the performance appraisal leads to poor outcomes. Typically an appraisal or review considers why people didn’t achieve 100% for each objective, and a discussion about what they didn’t do enough of, should have done differently and so on. If there is a conversation about what went well, it’s usually short and done upfront, then overwhelmed by all the improvement suggestions.

6. Managers don’t take accountability for performance ratings of their team.

If the individual hasn’t performed well, then it’s on them.

• Why is it the manager has no stake in this outcome?
• Where were they during the year supporting people to achieve their objectives?
• If the planning was poor, why didn’t they notice and help?
• If there were obstacles, why didn’t they remove them? If people were being blocked why didn’t they help improve relationships so things could be achieved?

A manager is successful when her team is successful, so surely we should expect there to be some joint accountability for outcomes? No, with the accountability all resting with the individual, and the power all resting with the manager, the performance appraisal can never be an equal affair.

7. People don’t trust the System.

For all the reasons above, employees are overwhelmingly cynical about the value of performance management systems, and rightly so. They don’t see them as adding value, instead they view them as unfair, something that managers “tick the box” on because they have to.

Is there a better way?

Of course it’s easy to diss performance management and talk about how it doesn’t work. What else could we be doing to drive better outcomes and enthusiasm for the process?

• Stop thinking about performance reviews as a 1 way street – think of them as a set of goals both parties need to deliver on
• With that mindset, set joint goals between leader and employee that both are accountable for delivering on
• Agree up front what the leader will do to faciliate the achievement of the objectives
• Jointly agree how often the you will monitor/review/discuss progress towards the goals, so issues can  be resolved on an ongoing basis
• Review sessions change to becoming progress conversations, and are held as frequently as the two parties agree is required.

This shift changes the nature of the conversation from one person assessing anothers performance, to two people assessing their joint progress.

You can read more about this philosophy at: Wall Street Journal

There’s also a great book called “Get Rid of the Performance Review” which I highly recommend.