Performance Reviews and Pay

Forrest Christian Careers, Managing 2 Comments

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.

Comments 2

  1. Your article touches the difference between a company/ consultant relationship and an employment relationship between employer and employee.

    The concept of pay for performance in the consulting world is admirable. It can be lucrative too if the collaboration is one where the company takes on the advice and specialized service of the consultant. In too many organizations consultants are retained only to be ignored.

    My experience with the annual “Personal Effectiveness Review” has been starkly different. Employees derive confidence understanding that the judgments of their manager have been formalized into a document, particularly where their effectiveness has been judged positively. Even where there is a judgment that is calling for improvement the employee will acknowledge the need if the judgment is fair. We all long to understand how we are going. Our security, belonging and esteem needs are all presented an opportunity for satisfaction in this forum.

    There should, in any event, not be any surprises that pop up at personal effectiveness reviews. Your assertion that indicates that every employee should receive feedback and coaching on his or her performance weekly is wise.

    The distinction I might offer is the difference perhaps between what is implied in a “Performance Review” versus what might be implied in a “Personal Effectiveness Review”. Performance denotes results. Certainly your performance arrangement as a consultant has a relationship with results and this is acknowledged as appropriate however we need to be cognizant of the accountability for results within the employment relationship. The immediate manager is accountable for the outputs of his or her subordinates. The “Personal Effectiveness Review” and ongoing coaching are within the purpose and context of the employee optimizing his or her effectiveness taking into consideration the resources that the immediate manager has assigned to the employee, as well as skilled knowledge, and coaching, to produce the manager’s outputs to the quality and quantity specifications, within the allotted time provided in association with the task(s) assignment. The judgment contained within the personal effectiveness review is an individual one, a manager’s judgment that is referenced to employee effectiveness in the format referenced against the cpQQT/R of ongoing and specific task assignments.

    Those managers who are compelled to the need to manipulate the system to make it work are mereley pointing at a dysfunctional system. The immediate manager intuitively understands that the effectiveness of each employee is an individual judgment and that broad brushed criteria, that is largely a measurement of results, or that defines targeted numbers of employees to ne herded into defined performance bands, does not suffice to optimize the effectiveness of the employee.

  2. Post

    Perhaps “real boss” abnormalities caused much of my issues with PRs: while I have consulted to “real bosses” I have not been employed by one. It’s a good difference between the Personal Effectiveness and Performance Reviews. I’ve not ever had both, so it is interesting to see.

    It strikes me that in the piece that sparked my rant (an interview with a top HR associate at Corning, which I do not have in front of me), the Corning fellow seems to conflate the two. Perhaps I misread or misremember, though.

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