Yearly Performance review

Yearly Performance Review

Yes, most corporations with Fiscal Year end near Calendar Year end are going through them now, thanks Jack Welch.

In principle, I agree with performance review concept. Actually when you go through most of them, they are great...on paper.

In essence they review employee performance vs. a set of objectives set at the beginning of the FY, providing feedback and ideally a sort of 360 view.

So far so good.

After that, employees are rated in a 5 bands system (it looks same HR Management consultants have sold the very same system to most corporations, we all have the 5 ratings...just names are changed).

In fact, we have gone through hundreds of them since kindergarten...doesn't it sound familiar? Is the good old A, B, C, D, E school rating.

Here it comes the 1st potential issue: if manager setting objectives didn't do a good job setting or tracking them, it is a useless act of faith.

Next, the so called 'calibration' or in other words, a ranking...and problems start right here. 

Most companies have a forced distribution, plotting employees rating in a Gauss bell; most of employee population will be around the mean, and just a few ones by the edges.

What the heck is that? Does it mean high performance teams do not exist? And, how is it possible comparing different professionals, with different objectives, assets, baselines, etc. ?

To make it worse, there is another problem: it assumes a fair behaviour. Most people have it, but not all of us. Thinking differently is naive.

There are two ways to look better in a ranking:

• The fair one: you do better than the rest. Full stop.
• The unfair one: making the rest looking worse than you...I call those employees 'rotten apple'. As they are so mediocre they cannot be better than the rest, they devote a huge share of their time and effort to undermine the others, do not share information, take credit (even from their own employees if by chance they are people managers), etc. And, like any rotten apple, if not taken apart they rot the whole basket (aka department). I'm sure all of us have somebody in mind right now...

That happens within a given department...but as Managers, Directors and VPs go through the same process, it replicates at all levels, making the whole organization weaker, instead of stronger. 

It fosters cliquish behaviour and prevents innovation as people do not take risks.

Key take aways

1. KSF for a good rating process is an excellent objective and goal setting  process ('SMART' rule) and a professional scorecard/dashboard  to track them.
2. Even with excellent goals, there is no better feedback than real-time feedback and 'walk the talk'. Don't wait 1 year!
3. Ranking/calibration is bullshit, unless everybody does exactly the same job (it might work in a factory).
4. Ranking may foster lack of collaboration and innovation, as well as worsening teams as soon as somebody behaves in an unfair way.
5. Set a good variable compensation scheme, that drives top performance, innovation AND collaboration, and forget about the rating/ranking, as the compensation will do it for you.