Grading Employees Fails the Grade

The traditional method of employee “performance reviews” has not only lost its effectiveness (if it ever was), it has become counterproductive.

I don’t know about you, but for me it made no difference whether I was the “reviewer” or the “reviewee,” the ritual of the annual job “performance review” always struck me as akin to evaluating the past and appraising the future based on the ruminations of a demented soothsayer. In short, they were, at best, a waste of time and most often they did more harm than good.

That is unfortunate because “performance meetings” between a manager and a subordinate can be a powerful tool for cooperative relationship-building, Review2increasing morale, instilling motivation, rewarding effort and ultimately, enhancing performance. No matter what the level of the job or responsibility, everyone wants honest feedback on his or her performance.

Yet, employees for the most part look upon a looming “annual performance review” with trepidation; they’re unsure how the boss views their effort and work. And the truth is that most managers see conducting the annual performance review of each employee as a burdensome chore, rather than an opportunity to communicate and build a deeper level of trust and respect with the subordinate. These dichotomous feelings of both the employee and the manager materialize for the simple reason that the traditional concept of the annual performance review is fatally flawed.

Rethinking the Employee Review

The artificial and sometimes awkward annual sit-down with the boss to have one’s job performance “rated” with such clear and defining terms as “outstanding,” “above average,” “satisfactory” or “needs improvement,” has been used to assess the performance of employees for generations. But it has outlived its usefulness – if it ever had one.

One specific weakness of the grading approach is that the subordinate’s future is dependent on the caprice of the boss. It is a two-way street as well, because often the one doing the rating seeks to avoid direct conflict with the employee and does not want to “hurt their feelings,” so there is a tendency to “over-rate” the performance of the employee. And that disingenuousness on the part of the manager can end up causing even greater problems.

These negative dynamics inherent in the traditional performance review system only leads to confusion and frustration for all participants. When the employee feels the assessment of the boss was unfair or inaccurate, there is little or no recourse and this directly impacts their morale and effort. When the manager is less than candid about performance –especially if it has been poor – it makes it difficult to take corrective action in the future. There is no question that this system is inefficient, ineffective and hangs on only because it is ingrained in the long-established corporate HR mindset.

Beginning to Recognize that Grading is Failing

The good news is that companies are beginning to recognize the weaknesses in the traditional performance rating exercise. The bad news is that they don’t seem to know how to fix it. This conundrum was brought home in a Wall Street Journal article. The Journal article aptly pointed out, “As companies reinvent management by slashing layers of hierarchy or freeing workers to set their own schedules, performance ratings with labels like “on target” stubbornly hang on.” The article pointed to a long list of some of the largest companies – Gap Inc., Adobe Systems, Intel Corp. and Microsoft – that recognize the weaknesses inherent in the traditional performance review process, but seem stymied in their efforts to create a better system. The problem is that these and other companies are locked into the past and are trying to patch fixes on an intrinsically bad system, when an entirely different approach is needed.

There is a Better Plan that can Make the Grade

How would you like to be in a school that not only conducted open-book testing, but also allowed you to grade your own test? Schools that have experimented with this approach have discovered that students given this freedom and responsibility were not only more serious about the effort, but ended up learning more. A variation of this approach was used for performance rating by one company I know and the results were amazing.

What the company did was to turn the “performance review” upside down by conveying the responsibility for assessing the performance of the employee to the employee. Not only did the employees end up more involved in the process, they established higher standards of performance and were more demanding on themselves than any manager could reasonably ever be.

Here is how it worked:

At the beginning of each year the employee was asked to list the five most important goals and objectives they had for their job in the upcoming year. Then they were asked to enumerate the specific actions they would take to achieve these objectives. Next, the employee was asked to list his or her three greatest strengths and weaknesses. Once these strengths and weaknesses were cataloged, the employee was asked to identify three specific efforts they would make to leverage their strengths and an equal number to correct any weakness. For the final step the employee was asked to write two or three paragraphs summarizing what they would be able to report as their performance at the end of the year.

This entire process was in collaboration with and support of the manager. This put an onus on the employee to be the ones setting the standard of performance and accountability. Once all was agreed to, both the employee and the manager signed the “plan of performance.” Then each quarter the manager and the employee would have a brief meeting to discuss the activity and progress the employee had established and committed to achieve. If adjustments were needed, they could be made at that time. At the end of the year there would be an “annual review.” in which the employee – not the manager – would take the lead. In effect, employees would “grade” their own performance based on the goals and objectives they had set for themselves.

The reality is that we know better than anyone if we are performing well. What the company discovered was that by using this approach to “self-directed performance reviews,” the employee set higher standards, had more of a sense of personal accountability and made a greater effort to meet established goals. Allowing the employee to set their own goals and performance standards within the job was a great lesson in empowerment and personal responsibility. It also fostered a feeling of trust and respect between the employee and the manager. This in turn promoted collaboration between the manager and the employee, with the manager in a support, rather than demand role.

This “open book” approach to performance review may seem like Pollyanna to those locked into the constraints of the traditional graded performance review system, but there are two things in its favor – it works and the old system has failed. Not only is this new approach simpler, it eliminates conflict and uncertainty while involving the employee in a way that makes them part of the process, not its victim. In short, it gets a passing grade.




20 responses to “Grading Employees Fails the Grade

  1. Thanks for the info Mac. I’m definitely going to use a version of this approach with my employees. I’ll let you know how it works out.

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