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Annual Staff Evaluations Fail to Make the Grade

I don’t usually turn to corporate America for what works in managing staff, but in this case, they might be on to something.  As reported in the New York Times, Deloitte Consulting and the Wall Street Journal companies are moving away from traditional performance reviews after years of experience and research has shown they are counterproductive and time consuming.

According to Deloitte’s World at Work study in 2010, 58% of companies gave their employee performance review system a grade of C or lower.  Stanford psychologist Robert Sutton was quoted in the NYT piece saying they would never get FDA approval because “there are so many side effects and so often they fail.”  My own experience tells me that grade would be even lower if the test was whether they actually resulted in improved performance of staff.

Why annual employee performance evaluations don’t work

1. Evaluation alone does not change behavior – There is a mistaken assumption that if people know where they stand, they will change.   If that were true, I’d love my scale more! There is a huge gap between knowing what you are doing wrong and changing behavior.  
2. We live in a conflict adverse culture – Most people are wary of making things worse through conflict, and so will cushion or avoid saying tough truths.  Managers are usually more positive than they feel. This is especially true when they are summing up an entire year of work, rather than feedback on a specific event.
3. Managers don’t have “super” vision – Managers don’t closely supervise professional staff.  In some cases they aren’t experts in the work of the people they manage.  The comprehensive nature of evaluations means that some ratings are by necessity guesses, and can be easily dismissed by the employee as uninformed. 
4. Evaluations trigger our defensives –  We humans are hard wired to defend ourselves when we feel threatened.   A high percentage of people feel some level of threat in an evaluation because it is about “US” and “OUR JOB”.  Being defensive in this setting is natural, but it also shuts down learning. 
5. Critical feedback can be catastrophized – Most evaluations are really a snapshot, but people can take one piece of critical feedback offered to improve performance and blow it up to life-threatening proportions.  This can lead to self-protective behaviors like avoiding work or criticizing the person who gave the feedback.
6. Too much information – evaluations cover a range of skills, responsibilities, values or other requirements for the job.  Ratings on each of these, plus written comments, becomes too much information for anyone to take in, much less do anything about.  A month after the evaluation, most people I ask can’t remember more than one or two things it said.  

If it’s broke, why not just fix it?

Corporate America has tried to fix the problems inherent in the annual evaluation system for years.  Each fix creates new problems.

• They tried to fix the problem of managers rating everyone as “above average” by using forced rankings.  This backfired by creating competition and resentment.
• They tried to fix the credibility problem of supervisors not being familiar with the work staff do by using 360’s.  This created a huge burden on the organization as everyone takes a week off to do evaluations. 
• They tried to fix the problem of employees being defensive by having people self-evaluate first.  This created the problem of having to “negotiate” the final evaluation document, resulting in meetings that focused on minor issues of disagreement, unnecessary grievances and wasted resources.  Fundamentally, does it matter if you are a “3” or a “4” when it comes to “Adoption of New Technology”?

What does work?

First and foremost, a culture of continuous feedback and development opportunities.  Secondly, a performance system that supports dialogue between managers and staff about development goals and how to achieve them, and regular check ins on progress as work changes and goals need to be adjusted. Alvarez Porter Group collaborates with social justice organizations in designing these systems so that they work for your culture and needs.

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