The dirty secrets of performance review

Have you wondered how performance reviews are conducted behind-the-scene?

When I was an individual contributor, I bought into what management told me — setting SMART goals in the beginning of the year. Work hard throughout the year. Write thorough and insightful self-reviews and peer reviews. Get 360-degree feedback from colleagues. And I’ll get a review rating I deserve.

Co-worker told me not to take review seriously. But, I tried not to be cynical.

After I became a manager and went through the review cycle at a large Fortune-500 company, my perspective on performance review was totally changed.

Let me tell you how performance review was conducted at this company behind-the-scene.

Employees first received notification from management in mid-January to complete their self performance reviews as well as peer reviews by Feb 15. Managers were told to complete reviewing their team members by March 1. Review results, promotion and salary information will be made available on April 15.

This company had also eliminated curve for performance review — for example, in the previous years, there was a strict curve for performance review. 20% are top performers, 60% are meeting expectation, and the bottom 20% will be given warning (and possibly "let go".) However, the company had decided to eliminate the curve and made a big announcement to the employees.

In late January, I received an meeting invite from my big boss to meet with him and other peer managers who worked under him. We would have an important meeting on Feb 1. I asked him what the meeting was about and if I needed to prepare anything. He said that I didn’t need to prepare for anything. Just showed up at the meeting.

On the afternoon of Feb 1, my big boss, and the six managers who reported to him, met at a large conference room. The big boss walked to the chalk board, and said:

"We won’t have a curve this year. But, let’s assume that you guys are on a life boat. The boat is about to sink. Assume that you have to throw people out to save the rest of the crew, who on your team would you throw out first, second, third, etc? I want each of you to rank your team members that way."

We looked at each other. We were puzzled. "Why are you doing this?" One manager asked.

"Don’t worry about it. I just want to get a sense of your team members".

Reluctantly, we went through this exercise.

"I thought our company eliminated curve for this year’s performance review?" I couldn’t help to ask.

"We don’t have a curve. This is an informal exercise to get a sense of our staff." The big boss said.

After we finished this exercise, the big boss wanted us to rank all of the employees across the six teams under him. He also wanted us to  identify six people with "high potential".

This was the most demoralizing part — every manager was trying to have their own people ranked higher than people from other teams. The problem was that the six teams under the big boss were quite independent of each other — there was very limited interaction between the teams. But, that didn’t prevent managers to attack each other.

When I said that Henry of my team should be ranked high given his accomplishments, another manager said: "oh, I don’t think so. I interviewed him and was never impressed by him. I wouldn’t have hired him". But, he had been working for the company for two years now. How was his job interview related to his performance in the past year?

There was a lot of back and forth arguments in the room — the managers were negotiating with each other to agree on a top-to-bottom ranking of employees across the six teams under the big boss.

Suddenly I realized something. I asked the big boss: "the employee self-reviews and peer reviews won’t be due for another two weeks. We should review all of the documents before we go through this exercise."

"Oh, it doesn’t matter. I trust you guys. We don’t have the time to read all of those documents." The big boss said.

A week later, on Feb 8, the big boss convened a follow-up meeting. This time, he handed each manager a one-page document, which has the performance review score and salary adjustment for each team member.

The big boss said: "take a close look, and let me know if there is any glaring mistakes. Otherwise, we’re done".

He also mentioned that six employees have been identified as "high potential" — the "high potential" mark will not be shown on the employee review document. They would never find out, but the company would give them higher raise, and provide them with more training. We were all asked to keep this information strictly confidential.

This was one week before employees submitting their self review and peer reviews, and six weeks before manager was supposed to complete review.

In this case, employee self-review and peer review had absolutely no impact on the performance review results.

I would like to make a few observations about performance reviews in this company.

First, the single most important factor in performance review is your relationship with your boss. If you boss like you and need you, he will bat for you.

Second, people have short memory and they ask "what you’ve done for me lately". So, make sure you have some visible accomplishments in the months prior to your performance review.

Third, regardless of what management tells you, there will always be a curve — companies need a way to identify the "low performing individuals". 

Fourth, it probably doesn’t worth it for you to spend a lot of time on writing yourself reviews and peer reviews. It’s very much a formality. Instead, spend the time building relationships and improve people’s perception of you.

Fifth, the result of performance review has a lot to do with perception of who you’re and what you’ve done, and has little to do with your actual contribution. This is particular true in large companies. Like it or not, accept the fact. Never let result of performance review to affect yourself worth. It has very little to do with who you’re, and have a lot to do with politics and perception.

Does every company conduct performance review like this particular company? Probably not. But, I do think performance reviews are done poorly in a lot of companies.

Am I being overly cynical? My intention is to share with you what I learned first-hand about performance review. My hope is that collectively we could help improve the performance review process.

Personally, I believe in entrepreneurism — everyone should treat his/her career as running a company of one-person. Seek valuable, tangible feedback from your market, your customer, your colleagues, your subordinates every day. You should do this on your own. Try to incorporate the feedback and improve immediately. Annual or semi-annual review is simply too late given how fast things are moving.

It’s your career. Your future. Manage your performance proactively. Don’t rely on the employer’s performance review. Give yourself a raise by working on side projects. You don’t want to put all of your egg into one basket by relying on your employer as your sole source of income. As you can see from this story, performance review is simple too political and too demoralizing for most people.

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