Fixing Performance Evaluations Part I: The Problem

One of the most important jobs you have as a manager is to evaluate your employees' performance. Ideally, you are providing regular feedback, and so the evaluation process is merely an affirmation of a status you both already recognize.

But, to be sure, it's not easy to deliver an evaluation to an employee whose performance is less than optimal. And, generally, as that employee's compensation – or even continued employment – rests in part on your assessment of his or her performance, you may be even more reluctant to provide negative feedback. And, of course, to give a negative review, there's all that paperwork that's likely to result: improvement plans, additional meetings to review progress, and so forth. Call this the problem of manager self-preservation: no manager really wants to make his or her own life more miserable by assigning negative ratings.

Companies recognize this dilemma, and most enterprises respond as they usually do: by overcompensating and making the problem worse. More than one company I know of publishes “guidelines” for their managers regarding the distribution of ratings to be assigned to employees. HR and senior leadership will deny it all day long, but their message is pretty plain: grade on the curve.

The curve itself is a familiar one. Companies seem to anticipate through their published guidelines that their own employees perform only slightly better than the normal distribution. Thus, one guideline suggests that on a scale of 1-5 (5 being best), 15% of employees should receive a 1 or a 2, 35% of employees a 4 or a 5, and the remainder (50%) a 3.

Think about that. On a team of 30 people, four or five would receive an unsatisfactory rating, each and every time reviews are performed!

Such guidelines are laughably flawed. They provide vastly insufficient support for the idea that we:

1. Hire for excellence
2. Coach poor performers (who actually improve as a result)
3. Rid ourselves of perennial poor performers (who didn't improve).

If I do award 15% of my employees an unsatisfactory rating this year, I certainly hope I've done enough work as a leader by the following year that that number will have been substantially reduced. But corporate policy has no room for such a concept.

Well, then: perhaps the answer is to keep raising the bar. Challenge my employees to do more and more each year, until some inevitably fall by the wayside.

While there may be reasons for a version of that approach on a sales team, in most other fields of endeavor, it just doesn't make sense. If I lead a team of programmers, and they are divining clever, efficient solutions to problems and producing solid code, then what exactly would be my plan for “raising the bar” the following year? Less bugs? More lines of code? I don't think so – diminishing returns will rapidly set in. At some point, they will be working at the highest level one can reasonably expect. Am I still to assign 15% of them a failing grade?

So, put simply, the problem is this: how do I ensure that ratings are assigned fairly, while avoiding the problem of manager self-preservation?

Tune in for Part II. :)