Thursday, November 10, 2016

Employee Performance Reviews: Necessary Evil or Righteous Path to Meritocracy?

“Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.”
      Garrison Keillor. A Prairie Home Companion.

“42.7 percent of all statistics are made up on the spot.”
      Steven Wright.

"Nobody's looking for a puppeteer in today's wintry economic climate."
John Cusack. Being John Malkovich.
I received another request for a blog from a colleague, this time on the topic of performance reviews: “Here is ONE that almost no one addresses honestly - The Employee Review System, the review process, the outcome, and its intended/non-intended outcome on the morale of an employee. This topic applies to human kind in any industry and one that pretty much EVERY company gets totally wrong…”

This topic has received a lot of attention recently as more and more large high tech companies have started abandoning a formal review process or at least abandoning review scores that pigeonhole employees into pre-ordained buckets.

Such processes usually start with the employee giving him/herself a score and then writing some text to justify that score. In my experience, most high performing employees ignore or minimize the effort, either not writing any text or writing a small bulleted list of their accomplishments, the rationale being that the manager already knows (or should know) what they’ve been working on based on regular interactions, so any time spent writing it up is a waste of time and effort. By contrast, low performing employees spend hours or days collecting data to highlight their efforts, writing long essays on why they should get a high score, sometimes even asking other employees to write recommendations for them. Great, exactly what we need. Low performers spending even less time doing real work.

Most managers tend to do as little as possible during the review process, writing at most a few sentences in the review form and giving the employee a score when they are hounded by their HR partners. The entire process is viewed as bureaucratic and a burden by most involved. If we are talking about a large corporation that enforces a fixed distribution, the managers then spend many hours huddled with other managers in calibration meetings, trying to highlight the accomplishments of the their team members and arguing for higher scores.

There are several major problems with this approach.

Most first level managers don’t have enough employees in their teams to meet the required distribution. Believing that their team members performed above and beyond the call of duty (don’t we all?), they come into calibration meetings with a distribution that would only make sense in Lake Wobegon where everyone is above average!

Calibration meetings thus become a battleground where every imagined problem (be it a bug introduced by the employee or an unanswered email message or a perceived slight) is dragged out and used as an excuse to knock down review scores for people in other groups - since that’s the only way my employees have a chance to get a higher score. In the case of large teams, you end up concentrating primarily on the top and bottom performers in an organization and ignoring the bulk of the employees in the middle of the pack - the ones who really need your help.

I remember spending entire days in such calibration meetings while at Microsoft. Needless to say, these multi-hour meetings usually end up being a forum for n-1 persons to read their email, surf the web, and otherwise occupy themselves while the n-th person delivers a lengthy sermon on the virtues of their team members. These episodes are only interrupted by the next presenter’s startled look as he reluctantly tears his eyes away from his laptop: “Ah, it’s my turn to talk about Jack now?”

Most of these shenanigans are performed simply because managers are handed a fixed budget for raises and bonuses with strict guidelines pertaining to each performance score: Someone getting a score of 3 of a scale of 1-5 can’t get more than a 3% raise, for example. Using labels such as “Needs Improvement”, “Meets Expectations”, “Exceeds Expectations”, and “Excels” is really no different than a score of 1-5 when it comes to evaluating employee performance nor is it any more conducive to healthy feedback and mentoring.

The biggest problem with these labels or scores is that once you have handed them out, it is extremely difficult to change them in the next cycle without causing morale problems: “What do you mean I only exceeded expectations? My last two scores were ‘Excels’.” There you go, destroying the morale of a top performer. Instead of concentrating on performance improvement, the discussion turns into a tug of war between the employee and the manager, the former trying to highlight accomplishments while the latter weasels out of responsibility and begs forgiveness: “I gave you an Excels but it was lowered by upper management.”

Another problem with such forced distributions is that they are nonsensical as you move up the organizational ladder. It makes no sense to compare the contributions of a kernel engineer to those of a UI developer or a tester (I will give you one guess as to who will come out on the bottom with that one every day of the week) nor does it make sense to compare junior employees to senior ones. And it makes even less sense for the arbiters of such decisions to be at the top levels of company - where those disciplines typically meet in a large organization. They don't have enough visibility.

At my last job, at a startup, we used a very simple model that worked well: KSS (Keep/Start/Stop doing). The idea is for the manager to write an email message to the employee: “Here are a couple of things I’d like to see you keep doing, here are a couple of things you’re not doing that I think you should start doing, and here are a couple of things you should stop doing.” No forms, no long essays, no calibration, no forced distribution, no fixed budget. I asked all my managers to run the emails by me beforehand so I could provide any feedback based on what I'd seen independently, and to make sure inexperienced or weak managers don't pull any punches when dealing with low performers. The emphasis here is obviously on providing feedback, reinforcing good behavior, and highlighting negative traits that need to be changed in order for the employee to succeed. I found that the simplified process forced me (and other managers) to be more transparent and avoided morale crushing discussions about why you are a “3” instead of a “4” this time around.

Such an email should take no more than fifteen minutes to write and no more than half an hour to discuss in person. Such a lightweight process, I believe, also lends itself well to more frequent checkins. Why wait for a heavyweight annual process if you can offer honest feedback once a quarter?

Let's cut to the chase. The idea of performance reviews is great. The implementation often sucks because it turns an opportunity for mentoring into a forced statistical distribution problem informed primarily by budgetary concerns.

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