What's the obvious issue with performance reviews staring us right in the face
The intent is commendable; helping people perform better. Yet, staff, managers, and even HR frequently complain about performance reviews...They are demotivating. They are anxiety provoking. They are disruptive. What is the obvious issue that is stopping performance reviews from achieving what they are supposed to achieve? Let's have a look at the research and the science of motivation and engagement. One thing is clear, it's good to provide people with honest feedback and encourage managers to coach people to achieve (even) higher performance.
So, talking about performance is good.
Even though talking about performance may be important, it's not something every manager will do without prompting. They may be busy, they forget, or they avoid. Therefore, regular performance reviews with the whole organisation are still important. This way we can ensure that everyone gets feedback at least twice a year.
Relying only on continuos coaching feedback - instead of performance reviews - sounds excellent on paper, but a collective call to action is helpful.
So, what's the problem?
The negative spiral starts with the rating. Surely, there may be other issues, but the rating is at the heart of the problem with traditional performance review processes. Without removing it, your problems won't go away.
Why? Let's walk through the 6 steps that have lead to the outcomes we didn't want:
Step 1. Humans' self-perception
Research demonstrates that employees, on average, rate their comparative job performance at the 78th percentile; that is, better then 78 percent of the other people in the office.
So, people intrinsically feel that they perform 'better' then average.
Step 2. The organisation
If you have a 5-point rating scale, you can't start giving everyone a 4 or 5, right? Otherwise you wouldn't differentiate between people's performance. Also, you may need to apply a distribution curve to budget performance bonus pay-outs (if you link ratings to a bonus).
So, most people will receive an 'average' rating 3.
Step 3. The discrepancy
This means there is a discrepancy between what the person feels they ought to be getting, and the rating that they receive.
Without fail, the majority of people are going to be intrinsically unhappy with the result - without you intending to do so. It's not your fault, it;'s not their fault.
So, humans are wired to feel that this rating isn't fair.
Step 4. The justification
So, what does the manager do? They need to justify why the person gets a 3-rating, and not a 4 or a 5.
The manager may sense the person's dissatisfaction even stronger if your ratings are linked to a bonus - as this increases the feelings of injustice. In that case, manager will feel the need to justify the reasons for not giving a higher score even more.
So, managers will feel a need to justify themselves for the performance rating they gave.
Step 5. The focus
What do you do to justify a lower rating? You focus on what the person hasn't done very well. You focus on the negatives that happened in the past. (true - about 75% or more of the average performance review discussion is spent on discussing the negatives)
What should have happened - an inspiring and motivating discussion about how to increase performance - is now doomed to fail.
So, the conversation is bound to focus primarily on the negatives and past performance.
Step 6. The outcome
Unhappiness, anxiety, demotion. And, another lost opportunity.
So, do something about it!