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The Case for Killing Performance Reviews

Appraisals destroy morale, guarantee dishonesty in the office -- and damage the bottom line, writes a straight-talking management guru and UCLA professor.

This article accompanies There's Got to Be a Better Way.

Monday, July 16, 2012
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I can sum up my views about performance reviews in one word: bogus.

In my book, Get Rid of the Performance Review!, I tear down each supposed pillar of support for the performance review, phony pillar by phony pillar. Let me offer a brief review of that destruction here.

First, there's the most obvious argument in favor of performance reviews: They're objective appraisals of an employee's performance. The boss has no desire other than to give an honest assessment of what the subordinate does well, and where improvement is needed.

Ha!

On the face of it, such an argument is absurd. How can any single individual know the ONLY way to get the job done? The answer is: He or she can't. Not unless this boss is all-knowing, all-wise and understands the unique way each individual goes about accomplishing the job. I've never met such a person.

Everybody is biased -- whether you're talking about the movie critic reviewing a movie, your spouse reviewing your relationship strengths and weaknesses, or a boss telling you what you're doing wrong or right in the job. Bosses are human, which means they come to a review with their own preconceived notions about how to get things done, about whether they like you or not, and what's in it for them.

Here's a simple piece of evidence that, in my mind, pretty much proves the performance-reviews-are-objective argument is hogwash.

According to studies, the easiest way to get a different review is to change bosses. In fact, according to one study, of those employees given the highest rating by one boss, some 60 percent received a lower rating from the second boss. Rest assured, though, that both bosses were convinced they were being "objective."

Second, supporters of performance reviews say you need the appraisals to determine pay. If only. As anybody who is responsible for pay knows, the flow is in the other direction: performance reviews are the stories bosses use to justify the pay that has already been determined. Instead, the initial pay is set by market forces, and raises are the result of corporate results and budgets.

Third, there's the argument that reviews help an employee identify weaknesses and grow. Well, that might make sense if the reviews were objective. But they're not.

And it might even make a little sense if they were measuring something meaningful. But as anybody who has ever given or gotten a performance review knows, they don't. Their one-size-fits-all format measures irrelevant attributes.

Most important, though, they don't help people improve because employees know the reviews they receive are worthless. If you know that the boss doesn't get you, doesn't understand the way you work, and is no more objective than your mother giving you a "5," then why would you take anything he or she says to heart? You wouldn't.

Fourth, many people will offer the "lawsuit defense:" If I don't put this in writing, I'm vulnerable to being sued when I fire the employee. A double "Ha!" on that one. Most lawyers defending fired employees will tell you that performance reviews are the best thing they have going for them. Using an obviously flawed, subjective tool in court doesn't help any company.

If performance reviews don't do the things they're supposed to, what do they do? Quite simply, they replace good management with management by intimidation. And that has devastating implications.

It means that, instead of speaking truth to power, employees will tell bosses what they want to hear. After all, who's going to speak the truth when it may come back to bite them in a performance review?

The impact on morale is obvious.

But in addition, as employees fear speaking honestly, companies lose the collective wisdom of the people who are actually doing the work. I don't really have to say that, in such an environment, the bottom line suffers. But I will: The bottom line suffers. Front and center in the employee's mind is pleasing the boss, not the company.

A few brave companies -- such as Adobe -- have recently started to finally pull the plug on the atrocity that is the performance review. But they are the exceptions.

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So, why do performance reviews refuse to die? It's partly that the performance review is all that companies know and it's a pain to change procedures.

Also, managers like the security reviews give them. Who wouldn't want that kind of power, the sense that only you know what's best? And then there's the human resource department, which derives much of its power from being the performance-review gatekeepers.

They should know better -- they DO know better. But if they give up that function, they lose their seat at the big table. And so they fight to keep it.

I believe an effective alternative to the performance review is something I call the performance preview. It's a two-sided, everybody-has-skin-in-the-game collaboration between boss and employee.

The boss still makes the decision, still has the power. But while the organization is hierarchical, the relationship isn't. Boss and subordinate work together to find out what the other one needs to achieve corporate results.

It isn't easy, mainly because it requires a psychological transformation. Bosses have to stop believing that they have all the answers, and they have to stop management by intimidation. Employees have to trust that this new relationship is genuine -- and start speaking truth in the workplace.

But while such a transformation isn't easy, it's soul-opening and organizationally revolutionary. It can make the world of work a safe, vibrant, results-oriented haven. Seems like a pretty good deal to me.

Samuel A. Culbert is an award-winning author, researcher and full-time, tenured professor at UCLA's Anderson School of Management. His book, Get Rid of the Performance Review! How Companies Can Stop Intimidating, Start Managing -- and Focus on What Really Matters is available at a variety of booksellers. He holds a B.S. in Systems Engineering and Ph.D. in Clinical Psychology. Watch him on ABC News. How much do you hate performance reviews? Find out here.

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