Performance reviews – a global scourge

By Bernd Debusmann
June 1, 2010

It is time to kill the annual performance review, for decades a feature of corporate life around the globe, dreaded both by those who do the reviewing and those who are reviewed.

It is a corporate sham and one of the most insidious, most damaging and yet most prevalent of corporate activities. It is a pretentious, bogus practice that produces nothing that could be called a corporate plus. It is universally despised yet few people do anything to kill it.

So says Samuel A. Culbert, a consultant and professor of management at the University of California, Los Angeles (UCLA) in a just-published book entitled, Get Rid of the Performance Review! The book grew from a 2008 article in the Wall Street Journal which, Culbert says, prompted a thousand letters to the editor and a flood of online comments, mostly in favour of his argument.

It is not new, but presented in particularly blunt language. A decade ago, a book by Tom Coens and Mary Jenkins entitled Abolishing Performance Appraisals made similar arguments, based on a study of 26 companies where morale, effectiveness and profitability had improved after they abolished appraisals.

Doubts about the process emerged as far back as 1957, with an article in the Harvard Business Review by Douglas McGregor, a management professor at the Massachusetts Institute of Technology, who suggested replacing the conventional boss-subordinate meeting with an approach allowing the employee to set personal short-term goals and evaluating himself.

An Uneasy Look at Performance Appraisal, the headline said. There has been a lot more unease since then, so why does the practice persist? And why would a date on a calendar be relevant to determining when someone’s performance needs reviewing?

Culbert zeroes in on two culprits. The first is a management theory – Management by Objectives – which came into vogue after the end of the World War II and provided for managers to set goals for their departments and then figure out what individual employees need to do to achieve department goals.

The performance review that went with the theory judged an individual’s performance rather than that of the department or organization. In that kind of system, where is the incentive for the individual employee to improve the corporation as a whole?

And the second culprit? Human Resources departments: they insist on performance reviews “to ensure themselves a secret-police-like power base they can use to secure themselves with managers.” Lest there be any doubt about his dim view of HR, they strive for “keeper-of-dirty-little-secret/KGB-like status.”

“BULL—-” AS ETIQUETTE OF CHOICE

As Culbert sees it, performance reviews, as conducted by most companies, are based on a myth – that supervisors can come up with a scorecard free of bias, sentiment and the personality of the manager. In other words, that they can be objective.

If that were the case, wouldn’t employees get the same rankings when they change bosses? Culbert cites a study (by the consulting firm PDI Ninth House) that looked at 6,000 employees reporting to two bosses. The rankings ran from “outstanding” to “very weak.” Of the employees deemed outstanding by the first boss, 62 percent received a lower ranking by the second.

And how can reviews be objective when managers are forced to sort employees into the infamous bell-shaped curve – 20 percent classed as outstanding, 70 percent as average and 10 percent as poor performers. That is a recipe, Culbert says, for guaranteeing duplicity and making sure employees won’t cooperate with each other.

“Employee No. 1 asks Employee No. 2 for some numbers. No way will he get them, because Employee No. 2 has no incentive to make Employee No. 1 look too good. Because if No. 1 looks good, No. 2 looks worse, relatively. You have a system where nobody wins.”

Contrary to corporate spin, the chances of a frank and open-minded discussion in the traditional once-a-year performance review session are remote because people are reluctant to speak their mind to their bosses and focus instead on saying what will earn points and make a good impression.

Pretense is more important than fact which is, says Culbert, why “bull—-, not straight talk, becomes the etiquette of choice in any corporate relationship where the only opinion that is listened to is the boss’s.”

That observation and choice of words is inspired by Harry Frankfurt, the Princeton University professor who published a slim philosophical treatise entitled On Bull—- in 2005. It took issue with “bull—-ters…who are attempting by what they say to manipulate the opinions of those to whom they speak.”

That obviously applies to more than corporate life and performance review sessions and the book’s phenomenal success (translation into 25 languages, a place on the New York Times bestseller list for months) points to widespread distaste for fakery and phoniness.

Does Culbert have a cure for the ills he diagnoses? Yes. He calls it “performance preview”, a system where managers mentor and coach employees to succeed. They have conversations when either feel they are necessary — not in a formal session once a year.

7 comments

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This reminds me of Brian Butterworth’s excellent book ‘Marked for life’ from the early 70s. Also, that the language of business is – regrettably – still more of a forked or foreign tongue today than it should be, given all we’re supposed to have learned in this greatest of all possible worlds.

There has to be a better way.

Posted by HBC | Report as abusive

he claims that there is only one way to implement MBO, but as everyone knows, you actually CAN reward employees for corporate/group success, you CAN hold informal “previews”- as he calls them- even with a yearly formal review, and ESOPs have actually been on the rise over the years. also, who ever said that you must bell curve a performance review? never have i been told that performance reviews should be bell curved; obviously that takes away from the objectivity of the review, so if companies are doing this, simply abolish that practice, not the whole practice of performance reviews. the grass isn’t always brighter on the other side; simply more complicated

Posted by 7jcjg | Report as abusive

Hear, Hear! I think they are uncomfortable for both the manager and the employee. It’s the employees who make the company go. What about their impressions of the management? What do they see mgmt doing? Swanning up and down the halls, sitting in meetings?

I think cultivating true respect and admiration for the mgmt and the company in the minds of the employees is more important than shooting at their feet and making them dance.

How is this done? Leadership by example, for one thing. Employee feedback is another. It has to come from the top. When VP’s are divided for the purpose of conquering by the corner office, the culture of fear will permeate the organization.

Posted by JetJaguar | Report as abusive

Something else that is total bull—-?
Rating on the bell curve.
“Well, we already have the high scorer (brown noser) so, you have to fall on the bell curve at some lower point (between the high scorer and the lazy one).”
What a joke.

Posted by LaurLaur | Report as abusive

At my previous retail job, my manager got her review before she gave us ours. She wasn’t allowed to score any of us higher than the rating she got.

Posted by drewbie | Report as abusive

Hello Bernd,
You shouldn’t have too much first hand experience with performance reviews :).

I see you writing about Mexico and drugs, about Afghanistan, China. That what polarize people.

But performance reviews?!!!
Are you getting sucked into dirty, murky waters of corporate life? Like this guy who “work on a floor of 90 people and four of those people take home about 70% of the annual bonuses”.

As usual I don’t agree wit you :).

Performance review is just stupid legal cover up to dispatch people. But is not real corporate problem.

The real problem is current corporate law. It allows management to use proxy voting to hijack votes of small shareholders. these hijacked votes are used to impose handpicked corporate board… You know the rest of the story. Huge bonuses, no personal responsibility, golden parachutes… Broken corporate culture.

Posted by sk_usa | Report as abusive

Performance reviews kill morale. A VERY over used word is “professionalism”. Professionalism means knowing your job well, and doing it efficiently and effectively every time.

But these days “professionalism” means, look good, smell good, and speak pleasantly enough to appear more competent than you really are. And it reaches the highest levels. That mindset is what creates the problems that corporate life causes the rest of society.

What ever happened to honest effort? What ever happened to REAL teamwork? These days bullshit is what gets you promoted and paid. Just look at the executives at Goldman Sachs and BP.

Posted by Benny_Acosta | Report as abusive