Slamming the Door on Performance Reviews
Publication: Wall Street journal
Article: Get rid of the performance review.
Author: S.A. Culbert
Annual pay and performance reviews are rarely fun (We can all attest to that!). But it remains a common practice in many organizations. Surely there’s a good reason why we have to go through this sometimes painful process (“my review is today, I can’t wait to hear about all my weaknesses!”). Although performance appraisals (PAs) are usually intended to help with pay and promotion decisions as well as help employees develop, some experts find PAs to be downright silly!
In a recent article published in the Wall Street Journal, Samuel Culbert provides several reasons why organizations should toss performance reviews out. Culbert argues that in practice, performance reviews often do NOT accomplish what they purport to accomplish. PAs are supposed to lead to employee and organizational improvement but often result in quite the opposite. But, why? Culbert suggests that:
1). PAs foster the power gap between supervisors and subordinates. Ideally supervisors and subordinates are teammates who work together to meet a common goal. PAs make this unlikely.
2). PAs are not objective. Even when supervisors gather data from 360s, reviews are based on personal judgments.
3). PAs are likely to lead to employee behaviors that are intended to please the
supervisor (ingratiation) and not necessarily behaviors that lead to improved performance.
4). PAs don’t really determine pay, market forces do. At best, PAs are stories that are used to justify employee pay.
In addition to his assault on performance reviews, Culbert offers a possible alternative: “two-side,reciprocally accountable, performance previews”. While the performance review focuses on “what went wrong in the past”, the performance preview keeps the supervisor and subordinate focused on the future.
The tone of a preview is how the supervisor and the subordinates can work together as teammates in the future. Both parties are accountable in the preview.
The conversation in a preview is not one-sided like the review (employee as the receiver). Additionally, the preview is more likely than the review to lead to trusting relationships between the supervisor and his/her subordinates which is a necessary first step to employee and organizational improvement.
Pay-for-performance: Helping those that help themselves?
Long gone are the days when Mom and Dad would offer a few bucks for an “A” on your report card to buy some candy from the grocery store. Now, the schools are starting to provide the incentives—and they aren’t just offering up bubble gum and lollipops.
A recent article from The Wall Street Journal (August 21, 2008) reported that a number of schools around the country are implementing new pay-for-performance (PFP) systems as means of encouraging high school students to enroll and pass Advanced Placement (AP) courses. The performance rewards (in some cases, upwards of$1000) are given to the top performing students on the various AP exams. With a great sigh of relief from its investors, longitudinal analyses of the PFP systems have shown mostly positive results—higher enrollment in AP classes, higher test scores and more graduating seniors moving on to college (whew).
But should schools (and other organizations, for that matter) be wary of the PFP reform? Research from organizational psychology, management and education indicates that although PFP is generally linked to higher overall performance and satisfaction across a variety of domains, there are a number of consequences that should be carefully considered before they are used (Rynes, Gerhart, & Parks, 2005, provide an excellent review of the issues associated with PFP systems).
For example, there is evidence to suggest that PFP is more attractive to individuals’ with greater need for achievement and self-efficacy, which are often related to characteristics such as education level and even gender or race in many work domains. Thus PFP systems have the potential to create discriminative compensation practices or entirely homogenous workforces if not carefully monitored. Furthermore, in jobs/tasks where units of performance are not clearly established (i.e., subjective supervisor ratings, etc.), the benefits of PFP are often difficult to determine and may actually be detrimental.
Time will tell if PFP catches on in our nation’s schools—in the meantime, I suppose a bag of M&M’s never hurt anybody.