Florida Human Resources, Recruiting and Retaining
5 Tips for Building High-Performance Teams
August 19, 2019
4 Ways to Improve Your Construction Safety Efforts
September 3, 2019

Are Performance Reviews Harmful?

There is a growing body of evidence that conventional approaches to strategic personnel management are no longer working. This is particularly true for performance reviews. Performance reviews are traditionally the time when employee and manager set goals for the upcoming year, an appraisal is written up by the manager based on the manager’s viewpoint and peer input, employees are ranked numerically and salary, bonus and promotion opportunities are awarded accordingly.

According to a survey conducted by the Society for Human Resource Management (SHRM), only 23 percent of HR professionals feel their company handled performance reviews in a manner that was “above average”. Other studies have had similar results. The Corporate Executive Board conducted surveys that found that 90 percent of HR leaders do not believe performance reviews are accurate and 95 percent of managers are dissatisfied with their performance review systems.

Most of the time performance reviews are based on a manager’s evaluation of the employee’s performance. The problem is that the manager is human and therefore subject to bias. For example, if you have a manager that tends to micromanage, he or she will evaluate a subordinate in a way that reflects how well the employee does the work exactly as specified by the manager. However, if you have a manager that tends to be hands-off and is only concerned with results, not so much how things get done, the evaluation will look very different.

With the first manager, if the work produced the expected results, but was not performed according to the procedures specified by the manager, you might be penalized with a low rating. By the same token, if you worked incredibly hard and contributed extra value to the company, but narrowly missed your outcome goal, you could be rated poorly by the second manager.

These two ratings seem unfair at best and demoralizing at worst.

Employees deserve better.

Some people might think that the manager needs better training in order to evaluate employees objectively. However, we all have biases that we may or may not see. A few common biases that tend to trip us up when trying to objectively evaluate others include:

  • the recency effect
  • confirmation bias
  • the halo effect.

Even with awareness that bias exists, and our best attempts to eradicate them, It is impossible to completely remove them. For this reason, companies today should work to remove the damaging effects of performance ratings, and instead, implement these four strategies.

  1. Remove performance ratings.

Any process that utilizes human judgement to assign a number (or letter) to another person’s performance should be eliminated because it is inconsistent and harmful to the employee.

  1. Set clear and objective expectations.

Managers need to be able to measure employees’ performance in objective ways. Keep working on this until the employee and manager are clear about the expectation and understand how it will be measured.

  1. Ensure managers are accountable for employees’ performance.

Managers should facilitate and cultivate performance, not simply evaluate it. Using a manager as coach management model will help. Coaches don’t decide who wins the game – there is a score (i.e. clear, measurable goal) that is posted on the scoreboard by the end of the game.

  1. Managers need to coach instead of control.

Sometimes managers need training in order to learn how to shift their management style to one of coaching instead of trying to control the employee. Coaches put players in the best position to succeed and win.

Traditional performance reviews are a relic of the past. The old method was based on seeing the employee as a replaceable “production machine”. In contrast, today’s smart managers know that the manager is actually in service to the employee, who is prized for their intelligent output. It’s time to view the performance review as a management tool that has outstayed its welcome, a vestige of the past that was more harmful than helpful.

Here at Lanier Upshaw, we know that attracting and retaining the right talent is essential to the success of your organization. Contact us today to learn more about how we are able to help you control employee benefit program costs while leveraging your benefits plan to give your company a competitive advantage.