Recently, a good friend of mine told me the story of a sick performance review and reward system. I mean “sick” as ill, broken, maybe even sickening — not “sick” as the youth today refer to something really cool.
The system bases rewards on the performance feedback from those around the person. This has been in vogue as “360 degree feedback” and other names in the past. In this case, it is actually codified in the union contract under which these people suffer.
But while rooted in a concept that seems to make sense (those closest to you are the best judges of your performance), it completely disregards politics, personalities, and fundamental laws of human nature. I’ve said it before, and I’ll say it again: define a system that affects people’s pay and they will find a way to game the system. Period. No exceptions.
In this case, the supervisor gets a significant bonus (>5%) if the people in their organization give them a 95% or better rating. The interesting point is that it doesn’t matter what makes up the definition of a 95% rating, the system is doomed to failure. Because it is relying on people to rate their boss (or their peer, or even their subordinates) it becomes little more than a beauty contest.
This system is no different than American Idol where people can choose to keep voting for a talentless kid just because he’s cute. People will find all kinds of reasons to rate people one way or the other. Especially when money is at stake.
In the case of my friend, soon there was a buzz in the office: “Rate him great, the last thing we want is for him to not get the bonus. He’ll be unbearable to live with if he doesn’t get it.” That’s probably not what the designers of the system had in mind. And remind me again why I should be pulling for my boss to get a big bonus, when all I got was a 2.1% “cost of living” increase (which he also got)?
But even if you somehow persuade people to treat the system seriously and give ratings that they truly believe in, you’re still stuck with the fact that some people are naturally hard graders, and others are naturally sycophants. I’ve yet to find a system that can account for individual grading “curves”.
I also don’t know how you account for the fact that some people just woke up on the wrong side of the bed the day the review was solicited. In fact, in the case at hand, one employee who was misbehaving was explicitly not disciplined until after the review was turned in, just so as not to spoil the manager’s score and bonus.
Of course, any good pollster will tell you that you can ignore these anomalies through the “law of large numbers”. Any suitably large group will self-control for these kinds of effects and you can basically ignore them (“the poll has an error range of +/- x%”).
But that’s exactly the problem here. Pollsters talk to 500, 1000, or more people. Your manager is unlikely to have more than a dozen or so people filling out their survey. One or two people swinging drastically bad (or good) can spoil the accuracy of the whole system.
And there is an even more insidious problem. Like most polls, this system gathers “classification data” — gender, age, ethnicity and so on. The goal is clearly to be able to tell the manager “your african-american staff hates you”, and some such useful feedback. That’s all good, no?
But what if you are the only asian female in the group? “Asian females think you are a jerk” might well be your pink slip ticket out of there.
All in all, these systems are a bust. Yes, I think some good, constructive feedback from those around you can help people become better managers and employees. And I think there is value in knowing how well you are doing, in the eyes of those around you, especially for the criminally un-self-aware.
But you certainly shouldn’t rely on these 360 feedback mechanisms for any kind of vital decisions. And for most folks, there’s little about work that’s more vital than money.