The dirty secrets of performance review

July 20th, 2009 · 20 Comments

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 your self 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 your self 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 everyday. 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.

Excellent resources:

Tags: Corporate Ladder · Frustration@Work · Management

20 responses so far ↓

1 Eric Shannon // Jul 21, 2009 at 8:53 am

great story! thanks for sharing…
2 TedHoward // Jul 21, 2009 at 1:08 pm

My take on reviews and ranking/curve are exactly as you describe. At good companies, it's less about how much people like you and more about your work ethics and results. The volume of text created by reviews is too much for any upper manager to read. Such decisions are inevitably made quickly based on less objective metrics.
If you want to influence ranking/bonus/etc then basically do your self-review and get peer-reviews 1-2 months earlier than the deadline and get them in front of the decision makers.
However, those reviews can be very useful. They are a way to get feedback on your performance. You can ignore it or use it to improve yourself. I vote for the latter.
3 GeekMBA360 // Jul 21, 2009 at 2:19 pm

Great comment, Ted. I like your idea about getting feedback 1-2 months earlier than the deadline, and get them in front of the decision makers. This will make the review process easier for the manager, and also give the employee more control over the process, and hopefully get a more objective review based on actual facts.
4 janetpalma // Jul 21, 2009 at 2:37 pm

A good example of how companies are simply getting out of performance reviews altogether. I am convinced that it's all politics and how much you've kissed the bosses butt. My former company dispensed with performance reviews altogether and a friend told me they now say they “want to keep it all verbal.” This way there is nothing in writing to tie the company into saying they ever thought you did a good job when they decided to let you go.
5 GeekMBA360 // Jul 21, 2009 at 3:00 pm

“Keep it all verbal”? That's pretty extreme. I'd think they still need some written record to justify promotion/review ratings/etc.? I'm not a HR professional, so I'm not sure if this will get an employer into trouble.
6 Vakhtang // Jul 21, 2009 at 8:30 pm

Excellent story, thanks for sharing.. I personally have never took Perfromance Reviews seriously because I have never believed in them anyway. I believe it is always important to make visible what you do and get other people to request your presense and expertise on their projects – that is something people always remember, especially when it is coming from your key customers. Thanks to that I was a SuperAchiever @ AAPT (Telecom NZ) and Best Comms Consultant.
7 GeekMBA360 // Jul 21, 2009 at 8:44 pm

But, how do you “make visible what you do and get other people to request your presence”? That's the “million dollar” tricks that a lot of people would like to do. It seems that you're quite good at it. Any tips to share with fellow readers of this blog? 🙂
8 calw // Jul 22, 2009 at 3:13 pm

Sounds like your company's HR group have been watching too many reality TV shows. Many times the biggest A-holes deliver the best results and need to be coached off their pedestal to be a more connected member of the team. It is a pity that Big Boss did not yes get his peer / subordinate review yet.
9 GeekMBA360 // Jul 22, 2009 at 4:49 pm

Maybe there should be a reality show about office politics. 🙂
10 DinahMoeHumm // Jul 23, 2009 at 3:04 pm

Sounds to me like the author worked for Nortel!
11 GeekMBA360 // Jul 23, 2009 at 4:27 pm

The particular story I wrote in the blog post didn't take place in Nortel. 🙂 But, based on the overwhelming feedback I received from fellow hard-working professionals, similar stories are happening in a lot of corporations, big or small!
12 BruceOlsen // Jul 23, 2009 at 7:35 pm

I've been part of pointless review exercises on both sides of the fence.

As a manager I was part of several stacked ranking exercises–never by choice. Interestingly, the rankings were “adjusted” by each higher level of management, so even the minimal value there was to the first ranking was lost by the time the EVP got the list (each of the rankings of a couple of thousand people were merged, believe it or not).

After a much-needed management change directly above me, we created a much better evaluation system for our group of about 30 software developers. It made clear what expectations were and gave feedback to each individual how well they met expectations. But we still went through the stacking, and gave out bonuses based on that.

I've also been evaluated using very formal (computer-based) systems, with multiple categories of objectives and very detailed evaluation criteria. There was even space for the employee to “rebut” points s/he disagreed with. But the manager made it clear he was merely going through the motions, and wasn't interested in any upward feedback.

As other commenters have said, one needs to understand the political structure and work within it. Not “play politics”, since those who live solely by politics most often (though not always) die by politics, but be sure you reflect your genuine accomplishments upward (more than 1 level). Take on key projects and put in extra time on them, but don't grandstand.

But if (as at some places I've been) it really all comes down to “who you know”, think about jumping before you get pushed. Even if you do get into the inner circle, it may well not save you (I've seen it), and you'll be shown the door without having had any big accomplishments to trumpet to your next employer.

With apologies to the late Walter Cronkite,… “That's the way it is”.
13 Andrew Wang // Jul 23, 2009 at 8:29 pm

I remember reading something similar in “Career Warfare” by David F. D'Alessandro

http://search.barnesandnoble.com/Career-Warfare…

Might be a good book for you to review in a future post.
14 GeekMBA360 // Jul 24, 2009 at 12:33 am

Thanks for the book recommendation, Andrew! I haven't read this book yet. Will check it out.
15 Carlomez // Jul 24, 2009 at 11:48 am

I've done a lot of performance reviews on both sides of the fence (as an employee and as a manager).
While it's true that the decision is usually taken before the performance review meeting, I wouldn't dismiss the meeting itself and the preparation of the perfomane review documentation as a complete waste of time: it's a good opportunity to compare your self-evaluation with the manager's evaluation of your work. If there is a good alignment during the whole year, starting with clear goal settings and following with regular one-to-one meetings along the whole year, there shouldn't be any big surprise at performance review.
Especially if you are new to the team or you have a new boss, don't rely only on the performance review process: it's super important to request feedback and to check your manager opinion/evaluation on a regular basis, and if you want to be a good manager, you should always set clear goals, always give both positive and negative feedbacks, check the goal attainement status at least every 6 months and update the goals if needed.
Also, don't rely only on the official goals in you scorecard: especially with a new manager, the actual expectations might be quite different and you don't want to wait for the performance review to find out.
Talking about ranking, it should be clear that there are two components in the performance evaluation of each employee: absolute results (missed/met/exceeded goals) and relative results, that is how well he/she did compared with other team members and, through “calibration meetings” compared also with other teams.

Carlo
16 WilsonS // Jul 24, 2009 at 9:17 pm

I completely agree with all your points here, however IMHO, its the immediate boss who matters the most in this entire relationship, period!

If you want to excel, do WHAT HE THINKS is right, and you will be superb or else kicked out, as simple as that.
17 satgarg // Jul 28, 2009 at 3:44 am

The story is absolute truth.
i have seen the exactly similar thing happening first hand in one of the worlds largest companies in India. It is a fact that has eluded the HR departments and they are always going bonkers why the attrition rate is going high.
Due to the alleged malpractices in the said company the management decided to have an outside agency – the world famous Gallup” do the survey to find out the way forward. As expected, the true picture emerged in the scores.

See the beauty if Indian minds!!!! It was very famously concluded twice that the participants – qualified engineers and mangers, assumed to be the brain bank of the company, one of the biggest pillars of its success were not able to comprehend the questions in the survey and thus gave faulty raitings.

And the practice continues.
Long live Indian corporate sector!!! some times we feel it is more disgusting than the government sector. Atleast they dont maintain false pretences.
18 Wil // Sep 19, 2009 at 5:31 pm

sounds like the last company i worked for, one of the bigger ones that had layoffs last year. 1000 call center employees. everything was already decided long before the reviews were due.
19 Wil // Sep 19, 2009 at 9:31 pm

sounds like the last company i worked for, one of the bigger ones that had layoffs last year. 1000 call center employees. everything was already decided long before the reviews were due.
20 1st page killer earningsreview // Dec 14, 2010 at 7:22 am

Thanks for this information.

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