The business world has a variety of annual rituals. But while there are occasional cakes in the break room to celebrate a birthday, the majority of them are about as enjoyable as a dentist visit. This despite all efforts to the contrary. For example, many companies have annual employee meetings that feature elaborate productions with cartoonish enthusiasm. Often, they are so over-the-top that they result in more uncomfortable laughter than undying loyalty.
Still, too many of the business rituals go well beyond being simply cringeworthy.
The annual budget reviews at Microsoft under Steve Ballmer were especially painful. An enormous conference center ballroom would be set up with a large square of tables seating at least a dozen people per side. Against the outside walls would be more seating for the hangers-on and aides there to witness the spectacle. Flanked by his accounting, HR, and other support people Steve would rule from a corner seat as the various divisions would file in to take their turn in the blast furnace. Armed with endless pages of spreadsheets filled to the margins with tiny figures, they would defend their projections in the face of withering examination.
Steve could read an Excel spreadsheet like Mozart could read music. Just the slightest glance it seemed could find the tiny soft spot among the hundreds of numbers. The one the division leader hoped he wouldn’t find. Steve would pounce, exploring the depths of why Grand Rapids had such terrible sales, and demanding details beyond all reason. He would plumb deeper and deeper until he drove the manager through the point of being flustered, beyond frustration, well past pain, and not infrequently all the way to tears. Then, his work seemingly done, he’d quickly move on as if nothing had happened. And the question of Grand Rapids and its poor sales, would remain unsettled.
After one such episode, I pulled Steve aside at the break, and practically begged him to not to take it so far. I got the point that people need to own their numbers and be able to defend their decisions. But taking it down so personally as to cause emotional damage to such smart and strong people was just too much. Steve was indignant, even livid, at my suggestion. He had the right, he insisted, and they should be able to take it. Months later he wondered to me why so many senior leaders were taking their stock profits and leaving the company. I wonder, indeed.
Budgets aside, there’s one process that seems to get everyone flustered. It’s the chance for the entire organization, not just managers, to suffer and be criticized. It’s the one annual ritual that everyone loves to hate: performance reviews. No one seems to like them, not the giver nor the recipient. But it doesn’t have to be like that. And that’s what this is all about.
This is Leading Smart, the show about Managing in the Brainpower Age. It’s a field guide to the joys and challenges of leading and working in the modern workplace. I’m Chris Williams, your guide to the stories and ideas that I hope will inspire you to be a better leader in the world of knowledge work.
In this podcast, we’ll take a look at how people meet the challenge of managing smart people in this Brainpower Age. Each episode, we’ll explore everyday problems and provide practical tools you can use to be a better and smarter leader.
In the next couple of episodes, we’ll look at the part of management that everyone seems to loathe: performance reviews. The first one covers the process itself. This is Episode Four: Annual Ritual.
At least once a year most organizations shudder and grind to a halt to embark on a bottom to top exercise in self-reflection that no one seems to look forward to. And each time, as it concludes, almost everyone asks, why did we do this?
I’ve been on both sides of a great many performance reviews in my career. As I noted in the Duck and Cover episode, some have gone spectacularly badly. I’ve talked to hundreds of managers, and every one of them has a performance review story. Few recount violence, but almost all involve mismatched expectations that result in far less than ideal outcomes.
And yet, although I don’t relish giving or getting performance reviews, I have come to peace with them. The first step in my journey to acceptance of performance reviews as a necessary evil was recognizing why we need to do them.
From an entirely human perspective, giving feedback is important, especially for Brainpower Workers. Their work is very dependent on their attitude and few things effect their attitude more than the feedback of those around them. When they get accolades, they excel. When they get pushback, they can correct. If it takes a formal process to get the feedback out there, so be it. Even if it’s almost never looked forward to.
From the organization’s perspective, there are also a lot of good reasons to insist on doing performance reviews.
The first is that many managers are conflict averse and hate to give personalized feedback. By having an organized, regular routine it can provide cover and some rigor to the process. And the organization is insured feedback happens, if only once a year. Much like an oil change or dentist visit, it’s just good preventive maintenance that would go undone if many had their way.
Second, reviews provide a chance to do some reflection on how things went last year and formalize expectations for the next. Most evidence is that both managers and employees rarely refer to their annual review for their daily to-do list. But it does offer the chance for both to step back and reflect on the larger goals — for both the organization, and the employee’s part in it. As I noted in an earlier episode, the project vision is vital, and a performance review is a great chance to reinforce it. And more importantly, to highlight each person’s role in it. Here, too, it’s more good hygiene than actionable work product, but it’s healthy, nonetheless.
Third, performance reviews offer a way to tie compensation changes to performance. You did a great job, here’s a raise and maybe a bonus. You didn’t here’s a token. The review can connect performance to the most precious of resources for most organizations: money. On its face, that’s great.
But, while this connection is often cited as the core reason for reviews, far too often it’s the other way around. Managers tweaking performance reviews to force the compensation model to match the available budget. Let’s be frank: this means you’re lying about their performance. If you’re forced to do this, please separate the performance and the numbers into two distinct processes. The better for each to be open, and honest.
Finally, reviews can document performance problems as a lead up to formal job actions like termination. The organization needs to document at least some of the ensuing feedback. Without it, getting rid of poor performers can be excruciatingly hard, and risks legal jeopardy. So, it’s important that some feedback makes it into the file. Even if that file goes unread.
In an upcoming episode, I’ll tell you about the time some of my carefully crafted review feedback went spectacularly unheeded, all the way to the cover of a magazine.
So, at their core, performance reviews can be an important and effective way to make sure that managers and employees are on the same page and headed in the right direction. As much as we hate them, there are plenty of good reasons to do them. The next question is: how.
There are lots of ways to do performance reviews, from the simple and more casual, to the rigorous and strictly formal. Every organization, it seems, stumbles from one format to the next. Some merely require some kind of annual one-on-one meeting, mostly as a way to communicate the change in compensation. They then follow that up with a written acknowledgement. At the other end of the spectrum, others formalize the process to include a battery of feedback loops, checklists, and forms that would make an IRS agent blush.
Like with most things, the sweet spot lies somewhere in the middle. Most have settled into some kind of a written review, at varying levels of detail that is shared between the manager and the employee. Some have the employee start the process, others have the manager provide feedback and have an outlet for the employee’s rebuttal. As long as some kind of shared understanding takes place, this part of the process can be flexible.
One feature of many performance review processes is the Review Score. Some number that tries to sum it all up and provides a key variable into the compensation equation. Organizations also use this as a way to subset or rank their teams.
Here again, is my chance to remind you that anything that attempts to distill complex human beings down to a number is ridiculous. We’ll discuss this seemingly uncontrollable desire for assigning people a number at length in a future episode. And I’ll tell you the story about my meeting with the man who invented the whole “stack rank them and fire the bottom 10%” fad and how he lived to regret it.
I’ve advised a number of people on how to create a good performance review process, and I fall on the simpler side of the spectrum. A brief form that the manager fills out, the employee reviews and adds rebuttal, followed by a meeting to discuss it all. I prefer open-ended questions such as “what went well?”, “what didn’t?”, and “what do we need to do next?”. And a written record is important for both sides. But spending weeks on a complex process is rarely worth it.
I know there are those who want to get broader input into such an important process, or want to make it less opinionated and more clinical. Some do a formalized 360-degree feedback process as part of reviews. I have lots to say in a future episode on those tools, but the headline is that it’s virtually impossible to remove politics from such a survey.
Some try to make the process more objective by having detailed checklists and itemized rankings based on the job description. But those require three things most don’t have: highly detailed and up to date job descriptions for every single position, an objective way to rank each item, and most importantly employees who only live within the box of the job description. One of the key features of great brainpower workers is that they push boundaries, take on challenges outside their specific role, and think outside the box.
No, I firmly believe there’s no escaping the fact that reviews are a subjective process, and trying to hide that with checklists, metrics, and numbers is disingenuous. Keep it simple, clean, and straightforward. Here’s how I think you did, and where we need to go from here.
The last, and to me the most important question of the performance review ritual is “how often do we do this”? I can hear the screams of agony even now as I mention this.
“You have got to be kidding me, once a year is plenty! It drags the entire organization off the job, sidetracks everything else, causes countless individual points of stress, and has a half-life that can take weeks to subside. Doing this annually is plenty, thank you.”
But hear me out. I firmly believe that the main reason performance reviews are so hard is that we only do them annually. Problems languish. Bad feelings fester. People spend an entire year wondering how they’re doing. Managers hoard feedback to spring upon employees at review time. And what, you only fire people once a year? No. Getting and giving feedback shouldn’t be an annual event like budget reviews or birthdays.
When I was in HR at Microsoft, I was a fan of doing them twice a year. For while we had a formal complex review, that involved compensation, annually. With a short form review half-way through the year. But I came to realize that the size of the form isn’t the problem. And the process went from being dreaded and disruptive once a year to twice a year. It eventually went away.
The key issue I keep circling back to is that, like seafood, performance feedback is best when it’s fresh. Bringing up a problem months later in a review often violates my “no suprises” rule from episode 3.
Worse this kind of dredging up the past, most often results in an unproductive argument. Memories are foggy, the importance of the moment is long lost, and the usual result is both sides giving up with “yeah, well, whatever”. It’s much like having a dog who poops on the rug. Swatting them on the nose several hours later is going to generate more questions than improved behavior.
Time for another of my bedrock rules: The single most important way to make performance reviews less painful and more effective, for both the manager and the employee, is to embrace a habit of giving feedback in the moment. You, as a leader, should devote yourself to a pattern of nearly continuous micro-sized performance reviews. When you do, the annual ritual goes from being some sort of painful slog through the past to an opportunity to look forward to the future.
Yes, here again I hear you. It’s crazy for me to say “hey, you hate doing performance reviews, so here’s an idea: do them all the time”. I get it. But here’s how it works in practice.
Let’s say you are leaving a meeting lead by one of your employees. Take a couple of minutes to pull them aside and tell them how it went. “That was great, Sally, I really like the way you made sure everyone got a chance to weigh in, and also how you drove it to some clearly defined action items. Both of us know you could have handled Ed taking the conversation off the rails better, and that’s something you need to work on. But overall, I think it went great. Thanks.”
That wasn’t hard, took just a couple of minutes, and it doesn’t have to be painful. Sally got some good feedback, a couple of good kudos, and a thank you. At the exact moment she needed them. She was probably fully aware of how she didn’t handle Ed very well. You’re not telling her anything new. You’re just both acknowledging it.
If she keeps having trouble in this area, you can make the feedback stronger after the next meeting. “You know, Sally, I think we both realize calling Jill an ***hole was unnecessary, and you really need to stop doing that.” If it persists, you move on “Sally, if you insist on doing this kind of thing, I’m going to have to take you out of your current role.” At some point, you begin writing her emails to follow that up, perhaps CCing your HR person. You might say “Sally, as we discussed, I’m concerned about your behavior…” and so on. You get the idea.
Think how much better that works than eight months later bringing this behavior up in a performance review meeting. Your written review would say “Sally is abusive to her peers.” Sally would say “like when?” and you’d fumble around and cite examples of meetings months ago. It would then devolve into an argument about whether that really happened, whether it was really that bad, and so on. It won’t end well. Sally won’t get better, and you’ll be frustrated.
If you’ve given constant and honest feedback, the review meeting becomes, as I noted in the last episode, the fulfillment of a promise. “I told you all along, Sally, that this behavior was problematic, today is the day that comes to fruition.” Nothing is a surprise, the ongoing issue hasn’t festered, and whatever action you take, whether that’s combined with compensation, firing, or something else, seems predictable and logical. Even perhaps overdue.
The result of this kind of proactive, continuous review approach is that employees get the feedback they crave at the moment they most need it and when it will do the most good. And when it comes time for the performance review, a tiny portion of it can be spent on reviewing the past. You can, instead point toward the future. You both can work on making great things happen for the organization, and you as the leader can focus the employee on their part in that.
Performance reviews don’t have to be an annual ritual everyone hates. Done right, they can be the springboard at the start of a great new year.
Leading Smart is from me, Chris Williams. You can find out more about the show and discover other resources for leaders at my web site, CLWill.com. That’s C-L-W-I-L-L.com. Or find me on social media as theCLWill.
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I also hope you’ll participate. Do you have questions about managing people? Do you work in an industry that faces these kinds of challenges? Are you, or do you know, someone I should be interviewing? Let me know. Each episode has a page on my web site, and comments are welcome. Or just send me an email to firstname.lastname@example.org. I can’t promise I’ll answer or interview everyone, but I read every email I get.
That’s it for this episode. The next episode is the second part of my look at performance reviews. We’ll talk more about what makes for a great employee feedback. And how you turn an unpalatable sandwich into a nourishing meal. It’s called Accentuate the Positive. I hope you’ll listen. Until then, please remember that each of the several dozen decisions you make today are part of Leading Smart.