On a recent coaching call, something was up.
Tricia didn’t have her usual bounce. I didn’t get the upbeat, “Hi... how’s it going?” Tricia is one of those people, who, no matter how badly her day is going, is always enthusiastic and positive — happy to speak with you.
It’s a strong leadership trait. But not today — the bounce was gone.
I asked what the problem was.
“I hate performance reviews.”
Tricia’s not alone.
One in five employees believes their boss doesn't think about the appraisal until they’re in the room.¹ Not exactly a great way to motivate employees or discuss big-picture goals.
Even HR leaders have issues with these annual reviews: 45% don’t think they are an accurate appraisal for employees’ work.²
It’s no wonder 30% of performance reviews ended up in decreased employee performance.³ People don't like them. They aren't accurate. They're ill-prepared.
And yet, we do them.
In response, some companies, like Accenture, have eliminated the formal, annual review process altogether.
This may complicate things.
Yes, the process itself is bad, but getting rid of the process is also bad, or at least complicated. Different departments are then forced to come up with their own, individual techniques for evaluating employees. ⁴
As well as a burden on staff and managers, performance reviews are a burden on the bottom line.
Charles Rogel, VP of Consulting Services at DecisionWise asked, “how much do performance reviews actually cost, and are they really worth it?”His analysis for organizations of 500 employees showed that: “The cost for the annual performance review process is about $120,000 just in the value of time spent. Take the number of employees to 5,000, and the cost soars to $1.2 million.”⁵
It’s easy to see why organizations like Accenture no longer have annual appraisals.
Performance reviews are time-consuming, and start to sound the same once you get past the first 3 or 4. They become an exercise in creative writing.
Most managers hate delivering an underperforming review.
Let’s take the case of a manager who has 8 direct reports, two of whom are underperforming.
Assume the Pareto principle. Just as 80% of your business comes from 20% of your customers, 80% of your upside comes from 20% of your people.
Imagine this team lined up side by side.
A flat line suggests that everyone is performing the same to the same level. They’re not. A more accurate line would be an S curve with a couple of standouts at the top, a couple of underperformers at the bottom, and the middle.
A typical team has some individuals that drive performance (giving you upside), and some that hold the team back (giving you downside). The rest neither move the team forward nor back, (net neutral).
This is the trick. Focus. Over the years, I’ve seen different points of view on where to focus.
The egalitarian approach. This is where we want to treat everyone fairly and mistakenly treat everyone equally. This is a mistake. One that turns into a time suck for you, distributes and diminishes your effort.
The easy way. Focusing on the people that come to you for help, or are easier to approach and deal with. This is easy for you but doesn’t do much to improve the performance of the team as a whole.
The great middle. Trying to move the majority of your team to the level of star performers. If you could do this, the results would be great. But the effort for you is high, because of the time needed with each individual.
The squeaky wheel. Focusing on either the person or persons that are underperforming the most. Almost the right idea, but not quite.
When choosing where to focus, we need to gravitate toward the top and the bottom — our stars and our underperformers.
This is a fair, but not equal, treatment. It's the minimum effort for you, as you focus your time. It moves the middle and deals with the squeaky wheel.
This is what we call “tails” management. To drive performance you focus on the tails. You shine a light on your top performer and you turn up the heat on those at the bottom.
Focusing on the people that bring you the upside, and the people that bring you the downside, will give you the biggest bang for your buck.
¹ Ilya Pozin “Why Everyone Hates Performance Reviews And How To Fix Them” Forbes
⁴ I Katie Heaney “Everyone Hates performance Reviews” The Cut
⁵ Charles Rogel “How Much Do Performance Reviews Actually Cost and Are They Really Worth It?” Decision Wise