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Why Performance Reviews Don't Improve Performance

Performance reviews should be scrapped.

In my article Why "Constructive Feedback” Doesn’t Improve Performance, I said “constructive feedback, which is usually critical, rarely helps anyone, and certainly rarely improves employee performance on the job.”

A number of management experts have recently engaged in renewed dialogue about the dysfunctionality of performance reviews, and a new idea on how to replace it using a positive “crowdsourcing,” process has produced a interesting alternative.

In his article in the Harvard Business Review, Tony Schwartz, President and CEO of the Energy Project, and author of Be Excellent At Anything, says that when we hear the phrase from someone, "would you mind if I give you some feedback?" what that actually means to most of us is "would you mind if I gave you some negative feedback?" wrapped up in the guise of constructive criticism, whether you want it or not.

There are some fundamental problems with negative criticism, regardless of whether we clothe it politely as "constructive." First, Schwartz contends, criticism "challenges our sense of value. Criticism implies judgment and we all recoil from feeling judged." Indeed, psychologists such as Daniel Goleman, contend that threats to self-esteem and sense of self-worth in the form of criticism can feel like threats to our survival.

Part of our resistance to positive reactions to negative feedback is the way our brains work. Neuroscientists have clearly identified that our brains are fundamentally protective, defensive mechanisms. If your ego and sense of self is threatened, your brain unconsciously will act to protect and defend, either actively or passively.

Nowhere does negative or constructive criticism appear more frequently than in performance reviews of employees. The prevailing theory is that criticism, which invariably is part of the performance review, will improve the employee's performance, and in addition the employee will positively welcome it. Nothing can be further from the truth.

The reality is that the traditional performance appraisal as practiced in the majority of organizations today is fundamentally flawed, and incongruent with our values-based, vision-driven and collaborative work environments.

Robert Sutton, a Stanford University professor, says that performance evaluations do more harm than good. A 1998 study by Development Dimensions Incorporated, found that employers themselves expressed overwhelming dissatisfaction with performance reviews. The consulting firm, People IQ, in a 2005 national survey, found that 87 percent of employees and managers felt performance reviews were neither useful nor effective. In an article published in The Psychological Bulletin, psychologists A. Kluger and A. Denisi report completion of a meta-analysis of 607 studies of performance evaluations and concluded that at least 30 percent of the performance reviews ended up in decreased employee performance.

Tom Coens and Mary Jenkins, in their book, Abolishing Performance Appraisals: Why They Backfire and What To Do Instead, detail studies that clearly show performance appraisals do not work and outline what could replace them. Garold Markle, in his book, Catalytic Coaching: The End of The Performance Review, argues that performance reviews have reached the end of their utility and should be replaced with a manager-employee coaching system.

Charles Jacobs, author of Management Rewired: Why Feedback Doesn't Work and Other Supervisory Lessons from Brain Science, says that the brain is wired to resist what is commonly termed as constructive feedback, but is usually negative criticism. Brain science has shown that when people encounter information that is in conflict with their self-image their tendency is to change the information, rather than changing themselves. So when managers give critical performance appraisal feedback to employees, their brains' defense mechanisms are activated, and the motivation to change is improbable.

Samuel Culbert, a professor at the UCLA Anderson School of Management, and author of Get Rid of Performance Review: How Companies Can Stop Intimidating, Start Managing-and Focus on What Really Matters, argues that employee performance reviews are "destructive and fraudulent." He argues "it's time to finally put the performance review out of its misery," adding, "this corporate sham is one of the most insidious, most damaging and yet most ubiquitous of corporate activities." Culbert argues that the performance reviews "instill feelings of being dominated. They send employees the message that the boss' opinion of their performance is the key ingredient of pay, assignment, and career progress." He contends that the use of performance reviews is about "power and subordination, making condor all but impossible," and causing employee defensiveness and stress. Culbert goes on to argue that the practice is more about intellectual laziness and ego-building for managers, and it avoids having to tackle the hard work of changing organizational processes. What should replace the performance review? Culbert argues that something called a "performance preview," a process that holds the manager and members of the manager's team equally responsible for results.

Literature abounds with systems and strategies for giving constructive criticism, and consultants have made lucrative livings implementing such systems in organizations, despite how flawed they are. Perhaps the silliest component of these systems is to suggest to the person giving the constructive feedback to "sandwich it" between positive statements, as if the person receiving the feedback will focus on the positive part of the sandwich, and not the negative. Again, this ignores the brain's programmed preference to respond to negative information.

Rachel Emma Silverman and Leslie Kwoh, in two articles in The Wall Street Journal, cite evidence from the Corporate Executive Board that some companies are now abandoning formal performance reviews and replacing them with “performance previews,” in which the boss or manager engages in a dialogue with an employee about how a specific task or project will be completed before action is taken. This places onus not only on the employee to specify the how and what action will be taken, but also places onus on the boss to discuss what supportive actions are necessary. This creates a two-sided, reciprocally accountable performance system. The boss’s job then, is to guide, coach, tutor, and assist the employee rather than judge, evaluate and find fault.

Social media can also be used effectively to provide feedback in an informal and developmental way. Some companies are now using online technology to regularly collect “crowdsource” feedback. This system allows any employee to give immediate and real-time feedback to any other employee or boss while work is progressing.

Erick Mosley, writing in the Harvard Business Review Blog Network, argues “a group of independently deciding individuals is more likely to make better decisions and more accurate observations than those of an individual. Crowdsourcing, by leveraging social recognition data, is a better way for managers to collect, evaluate and share information on employee performance.”

Unlike 360-degree performance evaluations, which are end-point or annual processes, crowdsourcing is ongoing and real-time feedback. Also, rather than constructive crowdsourcing evaluations that duplicate performance evaluations that look for faults or critical feedback, a crowdsourcing system can be used as a motivational tool, by providing positive feedback. “When the crowdsourcing conept is applied in this way,” Mosley says, “co-workers and peers can identify and reward desired behaviors and cultural attributes through unsolicited recognition, as they happen...This stream of recognition, which often appears in internal social newsfeeds, provides timely, measurable insights into your talent top influencers and performers.”

The reality is that constructive criticism is an oxymoron. All criticism is inherently destructive and negative, however we may attempt to window dress it, or "sandwich it" between positive statements. Anything constructive is associated with growth, which requires a person to be open, not in a defensive state of mind. When put together, these two ideas constitute an oxymoron.

To be in an open, receiving state of mind, the feedback must be positive, or at least guide the recipient to self-awareness and self-discovery. Leaders in organizations now have an opportunity to abandon a system that is not only dysfunctional but doesn’t recognize the latest in neuroscience research and take advantage of new social media technology.

Ray Williams is the author of Breaking Bad Habits and The Leadership Edge.

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