Anyone who has gone through performance reviews at work is probably aware of how painful the process is. Most people regard performance reviews as a game of chess, with the ultimate objective of checkmating their way to victory. In this post, I am going to provide some of the misconceptions people have about performance reviews and how to tackle them.
Trial by fire
I spent more than five years as a supervisor in the company where I worked. When I first got promoted, I still remember the first meeting in which the outgoing supervisor gave performance feedback to a young lady. It happened to be my very first performance review as I was taking over the supervisor role. Half way through the feedback, the young lady burst out in tears and started screaming hysterically. She clearly did not agree with the evaluation.
During the performance review session, I thought the crying and screaming was the incredible part. I mean talk about trial by fire. However, what really struck me was the conversation afterwards. At the end of the review, during which he had to pause twice for the lady to regain her composure, the outgoing supervisor said to me,
“Get used to it. This is how things are going to be.”
I turned to him and said “What is that supposed to mean?”
“It’s the way the system is. Not everyone can end up at the top. We have to bump people down to make the whole thing work” he said.
Stack ranking
Seems a bit twisted, does it not?
Performance reviews in most companies today are based on the stack ranking system which is also known as forced distribution. The intent is to rank all employees on a bell curve. Mathematics aside, the system is built upon the assumption that there always will be 15-20% of the workers who are top-notch, 15-20% who are practically useless and a large chunk of work horses in between. The compensation system is designed to cater to each group. The top ones are showered with bonuses and promotions. The bottom ones are told to get their act together or risk getting kicked out of the door. And the middle ones are “managed” using typical carrot and stick approaches taught in MBA schools.
As cruel as it seems, the worst part is that the system was never designed to be used in this way. Stack ranking became popular in the 1980s particularly at GE under Jack Welch. At the time US corporations, especially those in the manufacturing sector, were rapidly losing ground to their Japanese competitors. The idea behind the stack ranking system was to address chronic under-performance and turn the company around. The system worked very well as organizations were shocked into new ways of thinking. Eventually, it lead to higher revenues and market share.
Unintentional consequences
However, the problem with the system is that after a few cycles, the large pool of under-performers is shunted out of the organization. But the way the system is built means someone must end up getting the stick. What happens is perfectly good employees end up at the bottom and are told they are not good enough. Inevitably, it leads to toxic cultures where employees are expected to condition themselves into displaying fake behaviours most of the time. Unfortunately, with the onset of the COVID pandemic, things have gotten even worse. Companies, in their relentless pursuit of high performance, are resorting to using technologies to monitor the emotional states of their employees!
What ends up really happening
Line management is well aware of the problem of a broken system. What ends up happening is that supervisors pick and choose who will get boosted and who will not. The ones who are “pre-selected” to be in the top bracket are often given high-impact assignments that give them a lot of organizational visibility and the other ones are given low-value work. The system is deliberately rigged to make it appear that performance review ratings were given on merit.
During performance review season, as a supervisor I was told repeatedly by HR not to blame the system and tie the employee’s rating solely to his or her performance. We all knew it was nonsense. We knew the system was broken. Even HR admitted it. Human performance can never be compartmentalised into discrete blocks. But we were told not to say that.
If it’s that bad then why don’t they get rid of it?
The problems of a broken performance review system are well understood. However, what frustrates most people is that why does it persist? In my opinion, I believe there are two major reasons:
Organizational inertia: there is a hardened belief in management that not all people are the same. Therefore, the performance review system should reflect that. While it is true that people perform differently, it conveniently ignores the fact that everyone starts at different places and improves at their own rate. Is it fair for someone to be penalized on a performance review because he or she spent most of the year caring for a sick family member and could not put their nose to the grindstone like a fellow co-worker did?
Cost control: most companies claim that people are our most precious assets. However, the harsh reality is that employees are regarded as an expense line item on the company’s balance sheet. And, of course, all expenses must be minimized. Stack ranking systems are designed to achieve exactly that – minimize the amount of merit increases doled out each year.
Where do employees get it wrong?
Now as much as the performance review system is broken, there is no doubt that most employees add fuel to the fire rather than staying away from it. In my experience, the single biggest mistake that most employees make is to try to game the system to their advantage. They will engage in behaviors such as:
Take the last man standing approach: try to tear other people down by withholding information, intentionally misguiding, and taking credit for other people’s work. After all, it is easier to make yourself look the best by making others in your team look bad.
Try to give the impression of over-delivering: send emails during off hours and on weekends to give the impression that you are a committed employee, when there is no real need to.
Take on assignments simply for visibility: eagerly sign up for the latest initiatives and projects that are management’s flavor of the month but are unrelated to their field of expertise.
In my experience, I have observed that people who engage in unhealthy behaviour of this sort are only successful for a limited amount of time. Sure, in one year they might be secure a top performance rating or even land a promotion but sooner or later they will get caught in the cross-hairs. As Abraham Lincoln famously said – you can fool all people some of the time, you can fool some people all of the time but you cannot fool all the people all the time.
What are the three steps you can start taking right away?
Now that you know the reality of performance reviews, the best approach is not to get swept away by the crookedness of the system. The key is to focus on adding value to the business, rather than trying to look good at year-end. The three steps that you must take are:
Learn healthy behaviours: seek out people who are in the top bracket and who have earned it. It will be obvious. Everyone in the team will know who they are. One of the biggest attributes of respected top performers is that they have an abundance-driven mindset, not a scarcity-driven mindset. What does that mean? That means one gets richer by sharing and not by hoarding. By getting closer to those people and doing what they did, you can greatly increase your own performance.
Develop a positive relationship with your boss: there is no doubt that having wind in your sails is key to success. In my earlier posts, I talk about extensively on how to develop a relationship with your boss.
Don’t let performance reviews drive your self-worth: there is a natural human tendency to seek out acceptance from their peers. That by itself is not a bad thing. But in a broken performance system, it can be very damaging. Once you understand that acing a performance review involves a lot of factors other than delivering results, the rating by itself is not worth much and is not a true measure of who you are.
That’s about it.