Let me come clean: I have never had a good experience in any formal performance review. I tend towards the “tell me what you want me to do and let me do it” mindset. Whenever I have managed employees, I have always believed that if you didn’t know how you were doing at least every week, I wasn’t doing my job.
You would think that as a consultant, I would be gung-ho for anything that smacks of pay-for-performance. And I am. I’ve been consulting to business and industry since 1988 in a variety of positions, but the easiest description is simply helping people achieve their business goals. My last proposal, still in the works, had our money substantially tied to the company meetings its goal of moving from US$140M to US$250M. I believe in myself, believe in my ability to help someone go farther than they could otherwise. Pay-for-performance is the only way that I understand pay, and I understand performance to be tied to meeting goals that in the end are tied to some form of measurable state, whether growth, money, installation, or customer satisfaction.
But I just don’t understand what purpose annual performance reviews serve. Some of you use them and believe in them. What do you use them for?
My experience in them has created my dislike of formal employee performance reviews. I have performance reviews in my consulting on a regular basis. Normally I have to insist on them so that I and my client are always clear on what the other wants and is doing. But my experience with employee performance reviews has been different, in the limited times I have worked for someone else. Normally I had no idea what I was to be judged on, what the rules are. I went into them knowing that I would probably be hammered. The one time I figured I could coast turned into a horrible experience I have described at length elsewhere.
The stories I hear from corporate managers that I respect tend towards having to manipulate the system. Many of them go along the lines of the curve from university: it didn’t matter whether everyone answered everything correctly, because someone had to fail. I never liked the curve: it seemed to change the rules of the game to be simply competition rather than meeting set demands. Perhaps it represents the real market economy, but I’ve always been a cooperativist rather than a capitalist. The managers I respect seem to give out rotating poorer marks so that they can have someone who is not performing well.
So what are these things supposed to do?
I like Jaques’s ideas about felt-fair pay because it solves this problem. Pay people for what you hired them to do. Get rid of them if they don’t do it.
Also, Al has an interesting article (see the sidebar) about why incentive systems don’t work.