During my first performance review at my first-ever job, my manager told me that the ratings system operated on a five-point scale — except, it kind of didn’t. No one, she told me, was ever rated at one, and it was also rare for employees to receive twos. But no one ever got fives, either, meaning that most employees were considered average to just-above-average, collecting a bunch of threes and fours.
This, as it turns out, is pretty much the way most performance appraisals end up working, according to a new review of the literature on the subject. Most are nothing more than an “administrative ritual,” and they often end up discouraging employees instead of motivating them to perform better, the authors on that new paper write. And this is why, they argue, it is high time for the annual review process to die.
Mirroring my own experience, the research shows that ratings do tend to cluster in the average to slightly-above-average range, largely because supervisors fear “demotivating or disengaging employees,” writes Jisoo Ock, lead author of the new paper, who wrote it as a graduate student at Rice University. That means, for example, when companies rate employees on a scale of five points, “most organizations will end up with around 70 percent of people in the top two categories,” said Mary Jenkins, co-author of Abolishing Performance Appraisals: Why They Backfire and What to Do Instead.
The annual review has been in widespread use in workplaces since the 1960s, regardless of the fact that nearly everybody hates them. For instance, Jenkins estimates that 90 percent of companies that use some kind of annual review system scrap them every three to five years. And one of the reasons they’re so hated, Ock argues, is that the classic “sit down with your manager and review the year” model ignores the social context of the workplace. No one wants to hear negative feedback, and most people feel uncomfortable when they have to dole it out, too. Plus, the formalized feel of the process makes it feel weird; Ock points out that supervisors suddenly have to shift “from being inspirers, motivators, or even friends to being judicial evaluators of employees.”
The whole thing is just terribly awkward, to put it plainly, and there’s some evidence that this social discomfort can at least partially explain why the results so often end up being meaningless. In one study published in the early 1990s, researchers found that supervisors who felt the most uncomfortable about performance reviews were more likely to give their underlings lenient ratings, “because they wanted to avoid dealing with the discomfort and conflict that are often involved in delivering negative ratings or negative feedback,” Ock writes. And these fears are valid, to an extent. Even employees who say they are eager to grow and learn from their mistakes end up feeling discouraged and unmotivated after receiving a negative annual review.
Fortunately, there appears to be a simple alternative. Informal feedback sessions — conversations that take place directly following some disappointment in performance — have been shown to result in an actual improvement in performance. This is a point Sam Culbert, who teaches at UCLA’s Anderson School of Management, has been arguing for years. “The alternative is people talking candidly — we don’t want reviews, we want previews,” he said. It’s much better for everyone involved to talk about the important issues when there’s still time to take action, to fix what’s going wrong, he argues. “The boss’s job is to fill in the gaps and accomplish results,” Culbert said. “It’s not to give report cards.”
