Get Rid of the Performance Review!

ALSO BY SAMUEL A. CULBERT

Beyond Bullsht: Straight-Talk at Work

Mind-Set Management: The Heart of Leadership

The Organization Trap

WITH JOHN J. ULLMEN

Don't Kill the Bosses!: Escaping the Hierarchy Trap

WITH JOHN J. MCDONOUGH

Radical Management: Power, Politics and the Pursuit of Trust

The Invisible War: The Pursuit of Self-Interests at Work

Copyright

The information in this book is as up to date as possible, however, it is sold with the understanding that financial, and legal information is often subject to new and changing interpretations, government rulings, and legislation. The reader should consult with an employment law professional regarding specific questions.

Copyright © 2010 by Samuel A. Culbert

All rights reserved. Except as permitted under the U.S. Copyright Act of 1976, no part of this publication may be reproduced, distributed, or transmitted in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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First eBook Edition: April 2010

ISBN: 978-0-446-56971-2

Chapter 1

Now Look at the Mess You've Made.

IT'S TIME TO FINALLY PUT the performance review out of its misery.

This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who's evaluated hates it. It's a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus.

And yet few people do anything to kill it.

How could that be? How could something so obviously destructive, so universally despised, continue to plague our workplaces?

In part it's because the performance review is all executives have ever known, and they're blind to the damage caused by it.

In part it's because few managers are aware of their addiction to the fear that reviews create amongst staff, and too many lack the confidence that they can lead without that fear.

In part it's because HR professionals exploit the performance review to provide them a power base they don't deserve.

And in part it's because few people know an alternative for getting the control, accountability, and employee development that reviews supposedly produce—but never do.

Don't get me wrong: Reviewing performance is good; it should happen every day. But employees need evaluations they can believe, not the fraudulent ones they receive. They need evaluations that are dictated by need, not a date on the calendar. They need evaluations that make them strive to improve, not pretend they are perfect.

In fact, if firms did nothing else but just kill off this process they'd immediately be better off. When it comes to performance reviews, there's no question that nothing is better than something. That's how bad they are.

The mission of this book is to put corporate executives on notice that they have created a monster. With the help of performance reviews, they've built a corporate culture where bullshit, not straight talk, is the communication etiquette of choice. The result is a managerial mess that they better deal with, and fast.

To that end, this book both tears down and builds up. It exposes the performance review for the destructive force that it is. It describes why it creates such fear—and why managers thrive on that terror. It shows how even capable managers find it nearly impossible to realize their leadership potential with the performance review albatross around their necks. It explains why HR managers perpetuate the very practice that they should be leading the way to overturn. And it offers a substitute, the performance preview, that will actually accomplish the tasks that performance reviews were supposed to do, but never will: ensuring hierarchical control, holding people accountable for their actions and their results, giving employees the feedback and evaluations they need to improve their skills, and giving the company more of what it requires.

I intend to hold a mirror up to managers, forcing them to see how they use performance reviews to the detriment of both the employees and their companies (and ultimately themselves, by stunting their own growth as human beings). I will show managers that while the alleged purpose of performance reviews is to enlighten subordinates about what they should be doing better, the real purpose is intimidation aimed at preserving the boss's authority and domination in relationships.

Such intimidation is unnecessary, of course: The boss has the power with or without the performance review. But most managers don't really have a clue what holding somebody accountable means. They think the only way to deal with mistakes is to mete out punishments. No wonder people in the ranks are so defensive. Why would any rational person want to own up to their mistakes and admit to needing further development when the costs for doing so include deficient ratings?

To me, the problem boils down to one word: insecurity (although incompetence comes in a close second). Too many managers relish the authority they have—and fear losing it. They worry they won't be able to persuade their direct reports to do things their way. So they get their self-confidence the only way they know that the current corporate structure allows—by intimidating their subordinates into silent compliance. In other words, they scare the hell out of them.

That's true even with the so-called "popular" managers, the ones who smile, joke, and try to make everybody like them. At some level, they know that subordinates who want good ratings will overlook all the crap they hand down—the insensitive comments, the useless, just-in-case-we-need-it assignments, and the all-nighters to produce a report that was delayed because the manager had failed to read the first draft in time. Fearing the consequences, subordinates absorb insults and slights that outside of the office would never be tolerated. They remain silent when managers speak authoritatively on topics where the employee has more expertise, experience, common sense, and basic knowledge. They grin and bear it when managers use the imperial we, as if what is being said is fact and not personal belief or opinion.

The looming performance review protects the manager from dealing with how subordinates really feel. It's like an anesthetic: The unhappiness and anger is still there, but the manager doesn't have to feel a thing.

Lucky them.

Sadly, most managers are oblivious to the havoc they wreak with performance reviews. To some extent, they don't know any better: This is how performance reviews have been done, and this is how they will be done. Period.

Those Who Can't, Get Promoted

But let's face it. Few managers get their jobs because of their keen understanding of people, or their ability to bring people together when there are misunderstandings and differences. Most managers have never been taught how to be good managers. It's almost as if they learn to be managers the same way they learn how to do performance reviews: by filling in the blanks. Instead of being guided by an understanding of human nature, treating the people who work for them as unique human beings, they base their actions on self-serving logic and clumsy attempts at control. They fail to realize the most essential tool they have in getting quality performances is a trusting relationship with the people who work for them. It's really that simple. If they understood this, there never would be something as stupidly one-sided as a performance review that is defined by domination by the boss.

Here's a simple experiment you can try. Ask yourself: How often have you heard a manager say, "Here is what I believe," followed by, "Now tell me, what do you think?" and actually mean it? Rarely, I would bet. Bosses seldom show that kind of respect. They are too busy building up their own authority to make an employee feel that he or she has room to openly present a contrary view, even though everybody knows that at the end of the day the boss gets to make the decision.

Is it any wonder that so many employees have vague feelings of disdain and anger that sweep over them when their bosses are around?

The performance review is the primary tool for reinforcing this sorry state. Performance reviews instill feelings of being dominated. They send employees the message that the boss's opinion of their performance is the key determinant of pay, assignment, and career progress. And while that opinion pretends to be objective, it is no such thing. The overriding message is that the boss's assessment is really about whether the boss "likes" you, whether he or she feels "comfortable" with you. None of this is good for the company unless the boss is some kind of savant genius and reads the employee with laser accuracy in understanding that person's inner talents and personal priorities to accurately choreograph his or her efforts. Unlikely.

Put it another way: The performance review is the device that allows managers who do not understand human nature well enough to get along with the people they are charged with directing. It allows managers to avoid accountability for their misdeeds, incorrect opinions, and lack of knowledge. It is the insurance policy that allows managers to operate comfortably while employees are insecure.

It is the tool that lets bosses be totally insensitive—and not worry about it.

What's more, the performance review doesn't simply allow bosses to be bad managers. Its very nature almost forces even good bosses to be bad managers. Perhaps the best way to think about it is this: Managers don't just abuse the performance review; the performance review abuses them, by allowing bad managers to hide their incompetence and preventing good managers from getting the employee honesty that allows them to use their competence.

Good Hierarchy, Bad Hierarchy

Let me make something clear: I'm all for a hierarchical structure in a company. It is crucial, allowing everybody to know who makes what decision and who is the responsible party for contributing what. Done poorly, it creates a workplace where authorities are murky, decisions don't get made, and no one stands accountable.

But while hierarchy is essential for clarifying jurisdictions and responsibilities, it is entirely dysfunctional in a relationship and the development of that all-too-crucial trust. It makes healthy, give-and-take conversations all but impossible between bosses and the people who report to them. The reason is obvious: How can you have honest give-and-take when one person has a gun to the other's head, when the structure doesn't require, or even encourage, one party to listen to the other? When the structure, in fact, actively discourages listening?

This dysfunction is reinforced by the performance review, which forces the conversation between boss and subordinate into a box that undermines straight-talk interactions—and which colors every conversation between the two of them for the next 364 days. It purports to be about how well an employee is doing. But it can't be.

Why can't you have an honest conversation with boss-dominated performance reviews? Because a boss-dominated relationship will seldom elicit a straightforward statement that reveals what the subordinate actually believes. That individual is going to do what any human would do when out to make a good impression, where pretense is every bit as important as fact. He or she will focus more on saying what will earn points than stating what he or she honestly believes.

At this point, you may be asking: So what? So what if you can't speak your mind to your boss? So what if your conversations are, well, a bunch of suck-up lies? What harm does it really do?

Open your eyes. It does enormous damage.

Forget, for a minute, the damage it does on a personal level—the way it makes work lives miserable, the way it leaves employees feeling depressed and anxious, the way their overtolerance at work leaves them with too little tolerance at home. Just think about what it does on a corporate level, the enormous amount of time and energy it wastes, and the way it prevents companies from tapping the innovative, outside-the-box thinking that so many employees are capable of. If only, that is, they weren't so afraid.

Imagine, for instance, an early performance review given to Steve Jobs, before he went off to start Apple.

Boss: You don't seem to be making much progress in creating that circuit board.

Steve Jobs: I've got a great idea for a computer that could revolutionize this company, not to mention the world.

Boss: That's not what you're supposed to be working on. You're weeks behind schedule on the circuit board. Your goal was to be 70 percent complete by now. You're not even halfway.

Steve Jobs: The other day I stayed home to think with Woz about this. I know we can figure out something that can really make a difference.

Boss:What did you say?

Steve Jobs: Uh, I said that the other day I stayed home sick and woozy about this. I know we can figure out something that can really make a difference.

Boss: I hope so. We need to get this project done. I have to give you a 2 at this point.

Steve Jobs: I understand. I'll try to speed things up.

Boss: I hope so. Also, what's with the black turtlenecks…?

Now imagine that same review, in thousands of companies, with millions of employees—most of whom aren't Steve Jobs and will never start their own companies. Their ideas will remain where they are now: unspoken and buried.

What a sad loss this is.

The Alternative

The good news is that none of this is the way things have to be. (You will hear this phrase several times in this book, and for a reason: I don't want you to despair, thinking there's no way out. There is.) The one-sided, boss-dominated performance review can be replaced by a straight-talking relationship where the focus is on results, not personality.

In this new system, managers will stop labeling people "good guys" and "bad guys"—or, in the sick parlance of performance reviews, outstanding performers, average performers, and poor performers to be put on notice. Instead, they'll get it straight that their job is to make everyone reporting to them good guys, or own up to the fact that they don't know how with this guy. This is where the chemistry between boss and subordinate comes into play. The subordinate should not be victimized by having a bad match.

Getting rid of the performance review is a big step forward in allowing a boss and the boss's direct reports to communicate candidly about what's needed for better results on the job. If you're a boss, and your subordinate isn't succeeding, something is broken here. Doing more of the same isn't going to cut it. It's now time for you to ask, "What do you need from me to deliver what we are both on the firing line to produce?" And just as important, it's time for you to listen to the answer.

Asking and listening. Imagine that. It's called a conversation, and it's a rarity in workplaces today. Only by hearing what the other person thinks, and putting that person's actions in the appropriate context, can you actually see what the person is saying and doing—and how together you can get where the company needs you to go.

Performance reviews won't get you there, because that's just about the boss getting the subordinate to buy into his or her way of thinking. It's a mirror—not a window into the other person. But take away the performance review and you might actually have straight talk. There's still spin, but it's a different kind of spin. With performance reviews, the subordinate's agenda is ignored. Without them, I know your agenda, you know mine, and we go from there. Everything's on the table. Straight talk has a chance.

Proponents of performance reviews say that the problem isn't the review itself, but poorly trained reviewers. Sorry, but that doesn't fly: The performance review done exactly as intentioned is just as horribly flawed as the review done "poorly." You can't bake a great cake with rotten milk, no matter how skilled the chef.

Also, before you start griping about how I don't understand Margaret, the woman in your department who wants to do as little work as possible, or how Tom is so distracted by his life outside the office that he can't get anything done at work, let me stop you and say: I know that not everybody deserves to stay in their jobs. Getting rid of performance reviews doesn't get rid of slackers. Not everybody will leap at the chance to get better and grow. But everybody deserves the best shot managers can give them. And they can't get that shot with performance reviews.

In this book, I will prove to you, without any doubt, that the performance review is, at its core, a desperately flawed concept, and that it's time to put the onus on management for the problems they create with performance reviews. If teamwork, esprit de corps, and open, trusting, straight-talk relationships are your criteria, it's hard to find a single positive that comes out of performance reviews.

In chapter 2, I will explain how performance reviews work, and how they became so ubiquitous in corporate America. Why are they so popular, and why do companies stick with them when they systematically pervert reality and destroy trust?

In chapters 3 through 6, I will describe precisely what is wrong with performance reviews, and how the common perceptions about them are, well, misperceptions. They are not objective. One size does not fit all. They do not help employees develop. They destroy teamwork.

In chapters 7 and 8, I offer the alternative—the performance preview. It's as simple and elegant as it is successful. It does all the things performance reviews are supposed to do but don't. Once you understand it, I believe it will be impossible not to embrace the premise, for its ability to make managers better managers, employees better employees, and companies better performers.

In chapter 9, I anticipate some of your lingering doubts—and obliterate them (in all modesty, of course).

And in chapter 10, I issue a call to managers and companies to do what's right.

In the end you will see what many of you already know in your heart: that mainstream management is embedded in, and relies on, a culture of domination—and that the performance review is the biggest hammer management has. You will see how the review destroys our spirit, as well as our corporate performance. You will see how the same people who created this sorry mess have the power to undo it. And you will see that there is a way to fix it, if only we have the courage.

So go ahead and believe in performance reviews for now. By the end of the book, you'll be calling for their end.

Chapter 2

If the Performance Review Doesn't Work, Why Does Everyone Use It?

The chief operating officer of a large company calls, asking for a consultation on how his company might replace performance reviews. He and his boss, the chief executive officer, feel the reviews are alienating employees within all four divisions of the company. He calls a week later to see when I'd be available, but warns that his human resources department is trying to scotch the deal. "The KGB is at work," I tell him. "Exactly," he replies. Still, his boss hates the performance review system, and he wants to talk about it. Surely the CEO is more powerful than his own HR department! The chief operating officer says he will get back to me with a time to meet. He never does.

I'M NOT GOING TO WASTE ANY TIME arguing that the annual performance review is reviled by pretty much everybody who gets reviewed (not to mention the legions of people who hate giving them). You know who you are, and you know how much you despise them.

In the next chapter, I will begin tearing apart the performance review, flaw by flaw, bogus misconception by bogus misconception. But before I do that, let's address the elephant in the room: How did we arrive at this sorry state of affairs? And why does it continue? How did businesses get stuck for so long in this bad marriage with only a vague sense of how unhappy it makes everybody, and a feeling of hopelessness about escaping it?

I put the blame squarely on two culprits. First, a management theory that has pretty much passed, but whose legacy—the performance review—has had much greater staying power. And second, power-grabbing HR executives, who opportunistically use the performance review to elevate their department's stature. Take away the annual performance review and the HR department is back where it should be: supporting management rather than supplanting it and terrifying it.

Performance reviews are a throwback to the post–World War II era when modernizing management was all the vogue. In particular they are the bitter aftertaste of something called MBO (Management by Objectives), which always sounded good but never really worked.

MBO is pretty much what its name implies. It's a system that allows a manager to establish a set of department goals, and then focus on what individual employees need to accomplish to meet those goals.

From a performance evaluation standpoint, MBO made things remarkably easy: On day one, a subordinate sat down with his or her manager to review work priorities and to decide what goals, results, timetables, and metrics to shoot for over a period of time, usually one year. Here's how many phone calls you must make, how many calls must be converted into meetings, how many meetings into sales. With tangible results agreed to, a person's performance could be objectively assessed. Straightforward, don't you think?

Even better from the bosses' perspective: They didn't have to watch what their reports were doing every second. Now every subordinate knew what he or she was supposed to accomplish. If they didn't do it, whose fault was that? With scheduled performance reviews, arm's-length management became possible. Managers could skip daily involvement in their subordinates' work lives; they had a system that held subordinates accountable for keeping commitments, making their numbers, and producing tangible results. With their distance secured, they could stand back and avoid the fallout from train wrecks. They also found a way of getting promoted regardless of how many of their employees failed.

It probably isn't a coincidence that this was also when golf's popularity took off.

No question: MBO was a leap forward because it was holding people accountable for results, rather than simply the day-to-day work they were doing. But it wasn't long before it became clear that this was a system only an accountant could love. Unless, that is, the accountant was the one getting reviewed.

Much of the credit for recognizing the flaws in MBO goes to enlightened management thinker W. Edwards Deming. The problem with MBO, Deming and others realized, was this: Workers who received good reviews had no incentive to think about how to make the whole place work better. They had no motivation to look for ways to improve the company as a whole. Why should they? They were doing just fine, thank you very much.

And if the people on the ground didn't try to improve things, it's safe to say that things weren't going to improve much at all.

Imagine you're in a manufacturing business, selling standard widgets for a very profitable price, and special widgets for a premium that doesn't quite cover extra costs. The manufacturing department expects the majority of sales will consist of the standard widgets. But one day a salesperson in the field realizes he can please his customers even more by selling them special widgets, and he works with them on getting the lowest price possible. The salesperson, effectively, is in cahoots with the customer. Ideally, the salesperson would work with the manufacturing department to change the standard widget, so that it's more like the special widgets his customers want, leading to increases in margins and profitability. Likewise, the salesperson could spend time informing the marketing department of the appeal of the special widgets.