A few years ago, I was a huge advocate of performance reviews. I believed that an effective review process was the most important bit of people management any company could engage in. This belief was born of personal experience. I left school when I was around 14. I say ‘around 14’ because I’m not really sure how old I was. I don’t think I ever really made the decision to leave, I just stopped going in. I’m not sure why I stopped going in, and I’m not sure how I got away with it. What I am sure of is that it was Tom Hanks’ fault.
See, throughout the eighties, there was a seemingly endless number of films featuring a random young guy - usually Tom Hanks - who would get a job in the mailroom of a large company, and then roughly a month later become the CEO after saying something borderline insightful in a meeting he happened to overhear whilst delivering mail. I didn’t know many people with jobs while I was growing up, so as far as I was aware this was how business worked. I just needed to get a job, any job, then say something clever around the kindly owner with the nice moustache who would inevitably ask me to take over when he retired. This was my career plan.
It didn’t work.
I spent roughly 10 years getting fired from jobs I hated for being opinionated and difficult. Then finally, I ran into a good performance review process and a manager I actually respected. For the first time I learned what I needed to do to achieve the things I wanted, and I found out what I was doing that was making me difficult to work with. My career took off, and within a couple of years I’d achieved more than I ever thought possible. It is in no way an exaggeration to say that having an effective performance review completely changed my life. Understandably, this led me to think that performance reviews were vital to any company. They helped get the best out of me after all, and if they could help me, they could help anyone. Then not too long ago, something occurred to me.
What about the 10 years of failure that led up to that one successful review?
I had my first effective performance review at the age of 26. I had been working for over 10 years at this point. For a decade I had been at work, wanting to do well, wanting to progress and learn and thrive, and getting nowhere. I’d been disruptive to my company and co-workers, and I’d been frustrated, angry and ineffective. I was having performance reviews throughout that period, and performance reviews are supposed to help improve performance. They failed consistently for 10 years, and then when one finally did what it was supposed to do, I viewed that as a success. I realised that I had taken the one success I’d witnessed in my entire life, and decided that was all that mattered. Then I’d simply stopped examining that belief. Ever since that one good experience, I believed performance reviews were good and I completely stopped processing new evidence. A belief you don’t examine is not a good thing - it’s how people end up being racist or thinking they enjoy music festivals - so I stepped back from this one. I thought about what my true experience of performance reviews had actually been when receiving, delivering and supporting them. I examined what their purpose was, what they actually achieved, and finally whether or not they were the best way to achieve it.
And I realised immediately that they were dreadful.
So, first things first. What are they supposed to achieve?
There’s obviously a bit more to it than that, but that’s the gist of it. When I considered these objectives, I realised that even if the performance review was once the best way to achieve them, it certainly wasn’t anymore. Technology has changed since the performance review was conceived. At that time, a manager was necessary to collect and deliver the information that is shared in a performance review. They needed to speak to other people in the company to get feedback, they needed to have observed the individual over the review period, and they needed to deliver that information in a palatable way. That was the best option available at that time, but it isn’t anymore.
Let’s start with knowing what is expected of you. It used to be that a performance review was largely goal centric. You were set objectives, and your performance against those objectives was a major factor when it came to evaluating your performance. We’ve thankfully moved on from that time (or we should have). The OKR framework is by far the most superior way to align everyone to company objectives, and this framework specifically calls for performance reviews to be decoupled from objectives. This immediately simplifies the “what’s expected of you” component of a performance review to simply how you’re supposed to behave. That standard shouldn’t be set at an individual level, and it will rarely change. You don’t need a performance review to make it clear to people how they’re expected to behave You of course still need to communicate this standard, but it’s not like the old days where each individual would need to be set objectives they were going to be measured against in their review.
Even if you do want to assign people individual objectives, that’s almost certainly going to be best handled outside of the review process. When I did work with objective based performance reviews, I don’t think I ever came to the end of a review period where the objectives I was set at the start of period ended up being the things I was actually asked to deliver. However you slice it, what’s expected of you should be communicated outside of a review process.
Then there’s feedback and behaviour modification. Again, performance reviews are not the best way to do this anymore. Many performance review processes direct managers to seek feedback about the recipient from their co-workers as part of the review process. The Manager will speak to two or three people, ask a set of questions, get feedback, then use that information as the basis for the review. That’s extremely time consuming, and extremely limited. It was only a good idea when we didn’t have the technology we have today. Now, there are far better options. Everyone that an individual works with can easily have a voice about their experience of working with them. It’s easy to collect meaningful data and to present that in a way that’s useful and informative, without ever involving a manager. What’s more, this doesn’t need to be done once every 3-6 months. It can be a constant, dynamic process that responds to the work you do and the people you work with. Having a manager carry out this task in a performance review still is like having someone hand deliver notes instead of using Slack. We have far better tools to help people understand and improve their performance than a performance review.
The final point is regarding reward. There are obviously different approaches to this, but for the sake of this post I’m going to focus on the most common one I’ve been subjected to. I would be given a performance scored out of 5, and that performance score would be what determined my bonus payment. I say out of 5, but every time this has been done to me they’ve used a decimal place, so it was actually out of 50. This scoring system is almost universally irrational and unfair.
If you’re not a manager yourself you may not know this, but these scores are not actually a true reflection of your performance. They’re relational to the people in your team. Most companies have unspoken quotas for how many people can get top performance scores on each team. They don’t outright tell you there’s a limit, but if you tried to give everyone in your team a 5, there’s no way you’d be allowed. On several occasions I’ve been asked to give people lower scores than I had simply on the grounds that too many people had done well. Think about how stupid that is for a moment. Your job as a manager is to ensure your people perform as well as possible, but you are told that only some of your people actually should perform to the highest standard. A high performing team would see everyone perform to the highest standard. They respect, value and support one another and as a team they would produce great results. But if I’m in a team where I can’t get a large bonus unless most of my colleagues don’t, I am being actively incentivised not to support them. It turns my co-workers into competitors.
It’s not just bad for the people getting the scores though, it’s also bad for the company. If you’re the manager of a team that’s performing terribly, that’s your fault. When it comes to bonus time though, you’re going to assign your scores relational to the people on your team. So your top performer - who objectively may still be a bad performer - is very likely to be given a higher score than their performance warrants. The scoring system, when performance reviews are handled be a manager, results in the company spending more money on rewarding the wrong people.
More than anything else that came to light when I finally re-examined my opinion of performance reviews, this scoring system was the thing that most struck me as ridiculous. I simply couldn’t believe I’d persisted with something so obviously irrational. What surprised me when I started to talk about it was that everyone knew it was stupid already, they just chose to ignore it. They go along with it because it’s just the way the system works, and when it comes to us managers we even convince ourselves that our people don’t notice the shameless unfairness of it. But they do. They notice when their score isn’t fair, and talk to one another about their scores so they know when it isn’t consistent. The system is stupid, and everyone knows, and that’s why it doesn’t work. How could anyone take a system seriously that scores them a 42 out of 50 and their colleague who they know for a fact doesn’t work as hard as them a 43? It’s ridiculous. In literally every single company I have ever worked, the performance review process has been something that was openly mocked the moment nobody important was around, and the scoring system was always at the heart of that mocking.
This realisation was one of the biggest drivers behind creating DoThings. We realised that decentralising this performance management process was essential. If reviewing performance stays the sole responsibility of the manager, it will never be effective. If however we allow it to occur in an agile way that can more accurately reflect how someone is contributing to the company as a whole, it can be a huge positive for all involved. A company is a collective, and how you contribute to that collective shouldn’t be measured by only one individual. Taking this burden away from the manager benefits everyone. Individuals get better feedback, managers can focus on work that actually benefits the group, and countless hours are saved by avoiding the work necessary to prep them, deliver them, and manage the fallout from them.
And someone like me won’t have to wait 10 years to find out he’s a nightmare to work with.
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