Friday, January 2, 2009

Fixing Performance Evaluations
Part IIa: Some Ideas

I'll bet you figured the next post would be "Part II: The Solution". Sorry to disappoint you.

But I do have some thoughts on how to approach the problem. As you'll recall from my previous post, the basic problem with performance evaluations as they are now practiced is that managers are encouraged to ascribe ratings along the same curve year after year. Thus, managers find themselves torn between assigning correct ratings, required ratings, or easy ratings. The former are ideal, but managers will often avoid assigning appropriate ratings because there can be significant follow-up involved with employees who receive poor evaluations. Easy ratings create the least additional work for the manager, but tend to reward low achievers while disincenting stronger performers. The middle option - rating employees on the curve prescribed by senior management - is meant to force managers to assign appropriate ratings, but in practice does no such thing, for the reasons I discussed last time.

A significant drawback of the current system, really, is that we're relying on a single individual to assign these ratings. The employee's direct supervisor is responsible for the rating, and for the resulting coaching, documentation, or disciplinary action. Often, but not always, a reviewer will seek the opinions of others in the employee's sphere of activity - internal customers, teammates, and so forth - but even when a manager is diligent enough to do so, the weight and impact of that feedback can vary widely. Generally, while the manager may take such input into account, the math that combines those views with the manager's own observations to yield the final rating is mysterious at best.

But performance reviews are too important to be left to one person. And so, I give you that old chestnut, the 360-degree review. You know what this is, right? Everybody gets a vote. Of course, there's a problem here - if implemented broadly, review time will produce a transitive closure of everybody reviewing everybody else. All work will cease, the paperwork will exceed any building's capacity to house it, and that will be that.

Enter technology. It should be relatively easy to design a tool which:
  1. Helps identify 3-5 candidates who can provide input for a review.
  2. Limits the number of reviews any single individual can be assigned
  3. Makes it easy for reviewers to supply a rating and a 3-4 sentence summary of why they would assign that rating.
If each employee were asked to review a maximum of 3-5 other employees, providing a few sentences about each one, the process would not have to be endless, nor would it have to result in enormous amounts of paperwork.

Once 360-degree feedback is obtained, the final employee rating would depend mathematically, in part, on those "outside" ratings. That makes it difficult for a manager to unilaterally enhance or diminish an employee's achievements. Managers could be allowed to disqualify one or more outside ratings, but would be required to justify each disqualification ("Ted seems to blame Alice for that project's failure, but in truth, it was unavoidable.") Furthermore, if the rating assigned by the manager were significantly different than those assigned by outside reviewers, the manager would also have to justify that.

If the manager is incented to provide accurate ratings, by presenting his or her viewpoint against the backdrop of the feedback of others, it will become a lot less attractive to merely assign everybody a "3" (or a "C" or whatever your mid-tier rating is) and move on. Another benefit is that employees will have the karmic experience of benefiting, or otherwise, from their ability to work with the others around them.

Stay tuned for an additional idea or two on improving performance evaluations.

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