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Why Performance Reviews in Companies Are Pointless and Dumb

Why Performance Reviews in Companies Are Pointless and Dumb

“You have done a good job this year. Overall, your rating for the year is ‘Meeting expectations’.” How many of you have heard bosses use this during an annual appraisal? Well, I wouldn’t be surprised if most of you have. Have you also wondered like me how can an employee be rated as Meeting expectations after stating that the employee did a good job?

This makes us ask the question – are performance reviews effective after all?

Problems of performance appraisal

In the corporate world, many employees as surprised as a deer in front of headlights when they hear their rating end of the year. This is the primary reason most corporates have a flawed appraisal cycle. Shouldn’t the employee be aware of where he stands in terms of his performance?

Meet Edward(E for employee), who works for an MNC as a Quality Analyst.

Annual review

On the long term, Edward intends to pursue his long term dream of opening a Vietnamese restaurant on his own. Though he is not from Vietnam, he spent his childhood in an area that had a Vietnamese restaurant which served mouth-watering food. Once every month, his parents would take him to the restaurant and he looked forward to the visit every single time.

When he was dining at the restaurant he would tell his dad “I want to open a restaurant like this one day.” Over the years he heard others mention that being an entrepreneur in the area you are passionate about is your best bet. He has carried the dream for a long time and he hopes to live the dream someday.

He is working at an MNC for a reason. He believed the job would help him accumulate funds for his venture, improve his skills in real life and help him gain entrepreneurial skills. Little did he know what was in store for him.

The vicious cycle of corporate appraisals

Here is the annual story of Edward these days. Every year begins with a process of goal setting.

Goal Setting:

His Manager, Malcolm(M for manager), decides the goals for Edward. Malcolm identifies all the weaknesses of Edward and puts them together as the goals for the year. He also adds some result oriented goals based on the plans for the organization for the upcoming year. The behavioral goals are set by the HR team and added along with the other goals.

The whole working year:

Boring job

Once the goals are published, the rest of the year passes by with business as usual. Edward has forgotten his goals and so has his manager, Malcolm. Edward does what he thinks is right and his manager, Malcolm at times feels, Edward could have done better. Instead of providing this feedback he holds this back until the appraisal.


Self Assessment

After the whole year goes by, the time for the annual appraisals arrives. Malcolm initiates the self-appraisal process for all his direct reports. Edward has 2 weeks to complete his self-appraisal. Since 2 weeks is plenty of time, he waits until the last 2 days to begin.

All of a sudden he feels like a student who has an exam the next day on a subject he has no clue about. He pulls his hair, digs into email, backtracks over the year to recall his achievements because he had no track of them. He finds just a couple of items he can really call as achievements. To add flavor to his self-appraisal, he picks up some of his routine tasks, adds some flowery words to make them seem appealing.

He makes his vanilla flavored performance look like a sundae with nuts, choco chips, and sprinkles. He believes that he has met expectations this year, yet he rates himself as Exceeding Expectations. He knows that his manager Malcolm would rate him one level below his self-rating, so he would get what he wants by rating a level higher.

Review Discussion:

Manager Feedback

Malcolm prepares briefly for the review discussion with Edward. He has decided a rating for Edward well in advance. What Edward wrote in his self-appraisal barely made any difference to the rating. He did glance through it once so that he could counter the achievements Edward mentioned during their discussion.

During the discussion, Malcolm starts with one or two good things Edward did. The self-appraisal Edward wrote helped identify the achievements because Malcolm has not kept a track of the performance of his direct reports either. After discussing the few good things Malcolm throws a barrage of things towards Edward’s for improvement in a sugar coated fashion. Not only is Edward irritated with the feedback, but he is also surprised that he was not doing things the right away. Until the review discussion, he had no clue that he had to improve on these areas.

Unwillingly and without any other choice, Edward accepts the rating, which is either on par or less than what he expected. All the areas of improvement mentioned are set as goals for the next year along with some more. The progress on these goals will never be discussed again until the next appraisal discussion.

Hikes, bonus and comparison:

Hikes are low

Edward walks out of the review meeting surprised. He is not angry as such because he himself knows that he did an average job. He speaks to his other colleagues and hears about the rating they received. He is now agitated because he notices some other employees performing at the level that he was, getting a better rating and a bigger bonus than him.

He discusses these differences with his manager. Malcolm explains one or two reasons why the others were different. He also mentions the curve fitting process where he can rate only 2 people as exceeding expectations. In reality, he would have never rated Edward as exceeding expectations even if he had an option but he sugar coats his answer to console Edward.

The cycle repeats:

The vicious cycle repeats. Edward and his other coworkers whine about the appraisals for a week about how it was unfair. Soon after, everyone forgets about it and go back to their silos. The goals set are forgotten and everyone does work the way they think is right. Malcolm never gives feedback for improvement to Edward until the appraisal next year. Like an annual cycle of spring, summer, and fall, the routine repeats year on year.

Problems of performance appraisal

Incorrect performance appraisal

Why employee performance appraisal doesn’t work has more than a single reason. The entire process is wrong in every step. As much as the manager, Malcolm is at fault, so is the employee, Edward. It is incorrect to place the entire blame on any one of them. The manager is more in control of the process, so he is a bigger culprit. But that does not mean that the employee is innocent. Let’s go through the errors in each step:

Error in Goal Setting:

Goal Setting is not about piling all the mistakes of an employee as goals for the upcoming year. It is helping the employee grow and improve. The goal setting process has to take into account the long term interest of the employee and align his work to be in line with the same. This would help the employee remain motivated. Not all the long term interests of the employee will fit in with the goals of the organization. But if none of the employee’s long term goals fit with that of the organization, the interests of the employee and the organization are a misfit. It is extremely hard, if not impossible to motivate such employees.

The right thing to do: Malcolm should have set the goals for Edward over a discussion to understand how they can fit the organizational goals with the employee’s personal goals. Malcolm has results to achieve and Edward has his own goals to pursue. Over a discussion, they could have reached a middle ground.

Error in the whole working year:

Edward should have kept a close eye on his goals throughout the year and so should have Malcolm. Whenever there was a scope for improvement, Malcolm failed to give Edward feedback. Edward, on the other hand, was complacent and failed to proactively ask for feedback from Malcolm too. If Edward knew he was average, he would have put in the effort to improve.

The right thing to do: Malcolm should have provided feedback to Edward every two weeks or once in a month. He must have clearly told Edward where he stood. If Malcolm failed to provide feedback, Edward must have demanded feedback himself.

Error in Self-Appraisal/assessment:

Self-appraisal stands for what it states in English, which is to assess yourself. It is an opportunity to reflect on yourself and be honest about your own performance. If Edward makes his self-appraisal flowery, it is similar to a kid who fakes his report card to his parents. If Edward is not seeking continuous improvement, a self-appraisal serves as a process for writing a buffed up evaluation of himself which no one cares about.

The right thing to do: Edward should have kept a track of his performance throughout the year evaluating himself every few weeks instead of waiting till the end of the year. He should have been more honest about his performance for the year because Malcolm did not alter the rating based on the self-appraisal anyway.

Error in review discussion:

If Malcolm had shared the feedback every couple of weeks or in a month, a year-end review discussion was not necessary at all. Edward would have known where he stands and would have also put in the effort to improve.

The right thing to do: The review discussion should have been a formality where Malcolm mentioned the rating and Edward agreed to it because he already knew what was coming.

Error in hikes, bonus, and comparison:

Edward was surprised when he heard the areas where he needed improvement but he expected to hear a Meeting Expectations rating. He was angry when he realized that the others had received a better rating than him. Edward made his performance a factor of comparison with the others. If all others had received a similar or worse rating, he would have been relieved.

The right thing to do: Edward should not be agitated because others received a better rating. He should have compared his performance only against his past performance and not that of the others.

How to improve the appraisal cycle:

How to improve performance appraisal

The appraisal process is to foster the growth of both the employee and the organization. The employee’s growth and dreams must be taken into account during the goal setting. If not, the employee will not be intrinsically motivated to achieve his goals. When both the organizational and employee goals gel together like cement and sand, the result will be a solid structure.

The manager alone is not at fault, the employee is too. Feedback is the single most important element for stimulating growth. When an employee does something well, he needs to know. When the employee does something bad, he needs to know without any sugar coating with sweet words. The employee might not like the feedback, but he will make an attempt to correct it the next time.

As for self-assessment, employees must realize that it is an opportunity for self-introspection. It is not a platform for writing good things about yourself because the manager does not care about it anyway. Employees do not have to wait for the end of the year to perform a self-review. If employees review themselves with honesty once in a month, the benefits and growth will be tremendous.

Finally, the appraisal is not to compare yourself with the performance of the others. Each employee has their own pace, own skill set, and own style. You do not have to outrun the person next to you like a lion is chasing you. You have to learn to run better than how you could 3 months back like a bodybuilder improving his workout.

Channel your time and energy to beat yourself. Though people say “Do your best”, no one can do their best every single day. We call it “best” because it is your own record. If it was not your best, we would call it your average. Your target should be to improve your “average” all the time and not your all-time best. Barring a few areas(like athletics), improving your average makes you more successful than trying to beat your best. The easier way to improve averages is to raise your bottom than trying to better your best.

There is no need to attempt to shatter records. Start somewhere and better the average. Then aim higher, plod ahead and do not stop. Records will be broken in the process.

Self review

You do not have to beat the best performer around you or knock your competitor off his feet. A few months from now, you have to be better than what you are today and it becomes an endless journey of improvement. All you have to do is strive to beat your best opponent, whose reflection you see in the mirror every day. Go beat him/her today.

Why corporate appraisals are useless

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