Curing What Ails Performance Reviews

By Adrienne Fox Apr 13, 2009
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Plenty of managers and employees would love to attend a funeral for the dreaded performance review. At best, many regard the performance appraisal process as a meaningless annual rite that force-fits complicated human beings into simplified numeric or generic categories to fulfill an HR directive. At worst, managers abuse systems by inflating ratings of favored employees while deflating the accomplishments of others.

Employees and managers alike complain about the process being a tedious, biased, ineffective morale-buster. More than half of 556 human resource executives and line managers said they find little value in performance reviews, according to a 2007 survey by OnPoint Consulting, a New York-based HR firm. And a 2007 study of 2,200 employees by found that more than 60 percent of workers say reviews don’t do anything to help their future performance.

Nearly eight in 10 companies conduct performance appraisals; of those, 72 percent reported being only somewhat satisfied, not very satisfied or extremely dissatisfied with the process, according to a 2006 SuccessFactors study of 1,000 HR professionals.

So why do three-quarters of companies have some kind of performance evaluation system in place when everyone is so unhappy with them? Because, for better or worse, performance reviews are the best way to measure how an employee performs during a certain time period and the best way to determine how to help improve performance.

Also, in the legal reality of today, employers must defend themselves against unlawful termination lawsuits by providing documentation, usually a performance review.

The Rating Game

Anxiety. Fear. Nauseating. These were all words used by managers and employees to describe the dreaded performance review meeting. An employee has to have pretty thick skin to survive a one-on-one onslaught detailing all their wrongdoings during the past year. And, if the employee has no idea what the manager will say, the experience can be terrifying.

“Even surprise good reviews are bad because if employees don’t know they’re doing well, you’re not reinforcing that behavior, or you run the risk of losing a really good employee,” reflects Cindy Gerathy, HR manager at Belimo Aircontrols Inc., a Danbury, Conn., manufacturer of electrical actuators for heating, ventilation and air-conditioning systems.

Even a “good” rating can come across as “mediocre” to employees, especially with terms like “meets expectations,” “satisfactory performance” or “average.”

Because of previously in-vogue practices of forced distribution and bell-curve rankings, employees and managers may conclude that only a few spots are available for the top rating—and that if one person on the team gets the top score, there’s no room for another “star” player.

What qualifies a person for that elusive top rating also confounds employees. “Employees believe that perfect scores are not attainable, no matter how good they are, and that’s a problem for motivation,” says Lisa Wojtkowiak, client relationship manager in the Employment Engagement Practice at Opinion Research Corp. in New York. “Managers need to discuss with employees what they are doing well and what they need to do to reach the highest rating."

Feedback for Managers

Managers say performance reviews are no fun. They’re “one of the harder aspects of being a manager,” says Jennifer Loftus, SPHR, national director at HR consultancy Astron Solutions in New York. “When I had to do reviews that were less than stellar, I had knots in my stomach.”

Providing feedback and documenting performance takes time, a resource managers have in short supply. Managers don’t want to take the time, says Janis Porter, SPHR, manager of human resources at MDRC.

And, managers certainly don’t want to add to overloaded schedules. “Managers won’t rate ‘below expectations’ because they would be required to do a ‘work plan for success’ and meet on a weekly basis and document improvement,” says Penny Wilson, SPHR, director of corporate learning and development at Talecris Biotherapeutics Inc. in Raleigh, N.C.

HR managers see appraisal systems misused by managers who decide the rating first and then try to justify it. “Managers use it as a compensation tool rather than a performance management tool,” explains Kathy Wall, executive vice president of HR and organizational development at MediCorp Health System in Fredericksburg, Va. “They’ll say, ‘I need to keep this person, so I better give him or her a high rating so that this person gets a good raise and stays.’ But they don’t have good data to support the ratings.” 

Getting managers to provide “for examples” in reviews becomes a challenge. “I’ve seen reviews that aren’t as concrete as they could be,” says Loftus. “The feedback is, ‘good job’ or ‘good worker.’ The reviews aren’t specific or actionable, and they don’t tell me how I can get the top rating.”

This may have to do with overcomplicated forms. Appraisals “are unwieldy and have section after section after section,” Loftus says. “And if a manager has to do, say, 20 of these reviews, this can add up to a large amount of time.”

Rate, then Calibrate

Many organizations use calibration meetings as a way to ensure consistency among performance reviews and manager ratings.

Dick Grote, founder of Dallas-based Grote Consulting, who specializes in performance management, explains calibration this way: “Remember in college and you had professors who were easy graders and professors who were hard graders, and everyone knew who was who? That’s fine in college, but it’s not OK in the workplace when it impacts compensation and promotions and who gets chosen for a layoff.”

In the last few years, companies have asked Grote to lead calibration sessions as a third-party adviser. Before these sessions, each supervisor fills out performance appraisal forms and comes up with suggested ratings. Then, a group of supervisors, usually in the same division, reviews everyone’s ratings.

Grote designates a flip chart for each numerical rating and assigns each supervisor a different colored Post-it note pad. He then asks the supervisors to write the names of their employees on notes and stick the notes on the flip chart of the ratings they would like to give. “Because of the different colors, you see pretty quickly which supervisor is an easy grader and which is a hard grader and which one always goes for the middle ratings,” he notes.

“You get managers in other departments talking about this one employee,” says Grote. “It exposes talent to a much larger group of managers. In addition, it motivates the manager to work really hard to justify the ratings of his employees because he knows they may be subject to debate in the calibration meeting. The disadvantage is the added layer of administration, but I think even managers would agree that it’s worth it.” 

Don’t Plan the Funeral Yet

No matter how much people complain about doing performance reviews, employees, managers and organizations still need them.

“Performance management is like budgeting: It’s required in every organization, it’s cumbersome and onerous, it never comes out exactly as you planned, and managers always whine,” says Grote. “But you would never get rid of budget planning just like you should never get rid of performance appraisal—because no matter how flawed the process is, it’s good business practice.”

The author is a contributing editor and former managing editor of HR Magazine.

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