Sunday, September 26, 2010

Performance Reviews - The Third Sin - The Most Harmful of Corporate Practices

Come September, there is a sociological season change in my workplace. My buddy calls it the coming of the harvest months.

There is a purpose in the people, a spring in their steps … and if one follows them with time lapse photography or other devices of National Geographic film makers, one can detect a certain direction not only in their work, but also in their walk. This is the period when members of the client organisation is accosted with ingratiating smiles, eminently avoidable small talk and finally a prepared and mailed across feedback form that needs affirming stamp of approval.

These appreciation mails, earned through coax and cajole, with the most mundane of endeavours made out to be pioneering achievements, are virtually worn by the staff, in their newest gloss, repetitions, bulletins and forwards underlining emphasis, until these recommendations bear fruit in the form of a decent annual performance review, a fractional increase in the acceleration across the steep corporate ladder. Feats celebrated with relentless drinking  and happy hangovers – post harvest festivities according to my esteemed buddy.

Professor of the UCLA School of Management and the co-author of Get Rid of Performance Reviews, Samuel Culbert, argues that Performance Reviews contribute little positive and many negatives in an organisation. Among others, the axiomatic practice damages the relationship between bosses and their subordinates, keeps employees from speaking honestly about themselves and company practices, helps bad managers be bad managers and hinders good managers from being good managers, and ultimately hurts the bottom line. He also adds that there isn't a shred of evidence that anything good came out of this practice.

Whereas Professor Culbert’s arguments can be taken with the pinch of salt necessitated by the modern trend of management teachers in voicing the radical, there is a robust and, to me, irrefutable support from the celebrated quarters of Dr. Edward Deming who regards Performance Reviews as one of the Seven Deadly Sins of Management. In his epoch making book, Out of Crisis, Deming unequivocatingly states the downsides of the merit review process as he saw it. The idea of a merit rating is alluring. the sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise. In fact, he listed Performance Reviews as one of the seven deadly sins of management. However, like most of the other sins against which his astute mind warned, this practice is continued by corporations to this day.

Not mincing his words, Dr. Deming further added - The performance appraisal nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics… it leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.

Among the studies which have largely agreed with his findings, in my mind, the most fascinating is the one which shows that the best predictor of the current year’s performance rating is – the last year’s rating.  This is mainly due to the couple of reasons – impressions created by employees during the initial period in the company generally continue throughout their tenure, and the trend of same companies to hand good ratings by rotation.

Culbert further adds - The performance review, a practice that is as destructive and fraudulent as it is ubiquitous. Despite all the evidence — despite the fact that almost every person reviewed and every person reviewing knows it is bogus — corporate bosses do nothing to hasten its demise. They won't even acknowledge they have a problem. Performance reviews, in which bosses look for weaknesses and pretend to speak objectively for the company, while subordinates grin and bear it, misapply the hierarchical structure that is necessary in any organization. They ensure that the relationship is about power and subordination, making candour all but impossible, and defensiveness the behaviour of choice for stressed employees.

The possibly robust derivative of this phenomenon – the three hundred and sixty degree appraisal in which an employee is appraised by his superiors, peers and subordinates – is something experimented with very gingerly by some select corporate organisations, preferring to perch on the comfortable fence and wait till it becomes one of the undeniable norms of the employer of choice.

Why do corporations continue with this trait? Why do leaders they say they want candour in the workplace, but refuse to change the most obvious impediment to such truth telling? And why do they uncritically accept the notion that there is but one truth — the manager's?

Culbert says that this can be attributed to intellectual laziness to bring in alternative solutions, the leadership ego, the reservation to being proved wrong in front of peers and subordinates and unwillingness to fix internal processes.  The looming performance review protects the manager from dealing with how subordinates really feel. It’s like an anaesthetic: The unhappiness and anger is still there, but the manager doesn’t have to feel a thing.

This view, according to me, is a bit harsh on the managers. There is indeed a definite degree of truth in the fact that managers like the authority, to use much utilised terms like attitude problem and insubordination to subdue a threatening junior. However, it can also be attributed to the fact that reward and recognition is so intricately woven into our social interactions, that we cannot contemplate work without review. It is not only the manager, but also the employee who is equally at a loss here to supply a change.

Well, Culbert does promote the performance preview method.
Deming offers his method of educated leadership, responsible hiring, training and education, lengthy constructive discussions and focusing on quality. There are also other ideas and opinions which suggest ways and means to implement processes les ridiculous.

However, in a culture where people continually focus on the next three months, organisations whose human resources themselves flow about in the constant waves of attrition, where the absolute management focus is on the bottom line, next quarter and valued clients, the recruitment strategy based on immediate hires to fit burning requirements promised to the client, the corporation an organism with psychopathic character traits, the sole guiding factor for which is the returns, who will be providing the necessary thought leadership to ensure a change of process that itself is a paradigm shift across the corporate world?

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Simon van der Wiel is a fictitious character who appears in the novel The Best Seller by Arunabha Sengupta.

These lines are both collected from the novel and extrapolated from it - additional musings of the author through his alter ego

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Amsterdam, Netherlands