In the follow-up to my recent posts about performance management and judgement vs metrics, someone commented:
And in fact, the whole idea of routine performance evaluations is suspect here. Why is performance being evaluated? Do we mistrust our management staff? Was there a problem? Was there a huge success? Or are we doing it because we've always done it or business magazines say we should do it? What's wrong with defaulting to paying people market value for the work they do, then dealing with exceptionally good or bad performances as they occur?
These questions really sunk their hook in me. As an engineering manager, formal performance evaluations are my least favorite part of the job (my second least favorite is interviewing, which is sort of like a formal performance evaluation, but for someone that you’ve only known for an hour). Formal evaluations feel very different from one of the pieces that I love best: supporting someone to grow in the ways that fit them best. You’d think that encouraging employee growth and helping your team level up is what performance evaluations are about, but it doesn’t feel that way — the formal process tends to focus more on the broader organization than on the individual and their needs (or even their team’s needs), and comes with big overheads.
One big piece of formal performance evaluations that companies care about is that they be done as systematically and homogeneously as possible across the organization. The idea is to try to be as objective as possible. The process of getting all of these evaluations discussed and honed and equalized takes a fair amount of work — going as far as long meetings where managers debate evaluation scores down to the decimals, as in Google’s “calibration” meetings. The resulting scores feed into things like compensation formulas or promotions, but have little bearing on what really matters: improving how we work.
So, could we do without this process? Maybe.
We could delegate to individual managers monitoring for exceptionally good or bad performance, as the comment above suggests. One possible pitfall is lack of consistency across managers, which in turn could lead to unequal treatment of people on different teams. We would want to have some level of transparency and checks-and-balances, a way for managers to share their assessments with each other and align on a shared standard. Probably we’d want to document this, so we would write down what we mean by “exceptionally good” and “exceptionally bad”, and share that with everyone on the team. Suddenly it seems we have something that looks a lot like a nascent performance review system — perhaps a kinder one, with no decimal point scores, but still something that looks eerily familiar.
In my ideal world, we would work in a way where we can set compensation based on criteria as objective as possible, including market rates and some kind of measure of expertise (and a way of adjusting these over time). It would be amazing if we could trust managers to do a good job of helping their teammates grow, to recognize exceptionally good performance when they see it, and to correct poor performance as soon as it appears. This does involve, first and foremost, trust, and a caring management team that is working hard to be as unbiased as possible. Unfortunately, most executive-level leaders I’ve worked with in tech seem to have trouble getting to this level of trust towards their managers (as I’ve recently written about here).
Some younger companies are experimenting with these ideas. Buffer, for example, says they no longer do performance reviews. Others are playing with tweaking the format and frequency of performance evaluations. However, I have yet to see a company with more than a couple of hundred employees that has figured out a way to get rid of some sort of periodic systematic performance assessment. I am hopeful, though, that over time more companies will experiment in this space and come up with better ways to handle employee performance and growth.
Top comments (11)
This really matters to me (I left my previous employer largely because this was terrible for everyone): the Buffer article you link to goes into more detail around the 'why' of reviews, in particular linking them to mentoring and learning, hierarchy in a company (or not), servant leadership principles and as you note: improving the way we work - go and read it fellow commenters! I wanted to note the complete lack of compensation or promotion words there... these are much too divisive and/or game-able (playing to the psychopaths even?), and the reason I believe that organisations which link reviews to these things end up with insane amounts of regulation, union arguments, 'levelling' sessions and demotivated people who are now competing with each other in some form of internal market. There is no upside for the people, and the company may not save much on salary costs either as productivity drops, it's a lose-lose.
A more enlightened view perhaps: pay people enough to 'take it off the table', pay everyone the /same/ across the company if you are really keen on this! Set a clear goal for your group of humans together (define 'why' for the company), communicate, discuss and adjust/agree your goal regularly and measure your success as a group towards it. Focus feedback / reviews on achieving the goal, delve into the 'how' & 'what' to learn.
Try not to have 'make money' as the goal (sorry Eli Goldratt), and share the rewards openly.
(steps off soapbox)
I suspect that "figuring out what to pay you" is the main reason a lot of companies institute performance review scores. The traditional thinking seems to go like this:
people won't do good work if we don't give them "incentives"
we should set up incentives for our employees to do better work
let's incentivize employees with more money for better work, because money is the most obvious and easiest incentive to set up
we need a way to quantify "better work" to figure out who should get more money
i know, let's do formal performance evaluations!
There is a lot that is flawed in this train of thinking, starting with extrinsic incentives as the main driver of human motivation. But that's a whole other post. ;-)
I, too, wish we could move to a system where compensation was less of a distorting factor in so much of how we work, from hiring to performance evaluation. Sadly, capitalism. 🤷🏼♀️
(But let me know if y'all know how can we start a tech co-op together!)
I have worked under a system where compensation was proportionally shared across everyone - outside of executives of course 🤨. AKA everyone's percentage increase was the same.
It certainly made HR's job easier. They just had to take the amount of $$$ the CFO said was available for compensation, x, then solve for % y where ∑i × y = x.
It was not good for morale. There was likely some of the "80% of people think they are an above average driver" in people perceptions of where they sat on the spectrum, but if you are 100+ people the likelihood that everyone is contributing the same is pretty small. You likely have some sort of bell-curve going on and I know that I at least didn't think it fair that the company valued us all the same.
And that's the thing - the money you are payed is how the company expresses how valuable it thinks you are to it. There's a whole other thing about how accurate it is in doing this, but the money is basically a quantifiable measure of corporate love towards you. The company can't buy you chocolates and flowers, give you a foot rub, or make you a mix-tape - in fact it would be wrong to do so 😃. But it can give you money, and maybe more money than other people. It's basically the way it shows it cares.
Your anecdote and argument seems to assume that the compensation for each employee needs to be directly tied to some measure of how much "value" they contribute, presumably where that means "business value". Ergo, the rationale goes, since not everyone is contributing "the same value", they should be compensated differently, and so we need a way to measure this "value" that employees are delivering -- hence performance evaluations.
I think it is interesting to explore this assumption, though. In fact, I find this a very American worldview, and it does not hold necessarily true in other countries, even Western European cultures.
I believe this is in part what Phil was pointing at in his original comment -- that these assumptions go largely unexamined, and we could stand to look for a "more enlightened view", as he calls it.
That's an interesting analysis of the core point. I'll need to think about that a bit more.
My immediate reaction is to refer back to your comment of 'well that's capitalism'. If we reach a Star Trek level of post-scarcity then the very idea of compensation becomes laughable. Until then it's the best form of appreciation a corporation has to offer.
I don't think that this is a binary-thing though. There are some places that have a more hybrid model, where some of the compensation is shared unequally, according to what the organization perceives is the relative performance of individuals, and the rest is shared more equally. Because the fact is that a group is more than a sum of its parts.
Yep, this is where I was thinking, thank you both for getting it despite my mild rant (it still irks!).
One thing that could help is a clear understanding in job descriptions and company policy that they operate as a non-competitive organisation internally, while still being part of the larger capital economy (ie: competing with similar companies). Interesting to hear that an organisation attempted to distribute their reward proportionally and it was not well received. I had a similar experience a couple of employers ago and it went down very well with us, but we were a UK consultancy company of ~100 people, not a US product company.
In my mind it's all about focussing on the right goal for the business everywhere and having processes that support that, avoiding ones that disrupt things... I'm a bit socialist at heart, very keen on universal basic income, decentralised global currency and StarTrek levels of non-scarcity, which I believe is possible now if greed can be overcome as a species - enough with the philosophy, I have profit to produce for my shareholders...
I understand and agree that a too competitive environment can hurt people. But I don't see fair to compensate everyone the same. I think if you perform better (whatever it is), you should get more. If not, why would you deliver more than the others? Why would you deliver more than the least necessary?
Because I love what I do?
Well, once I did the least necessary, I would keep doing what I love to do, but for someone else. Maybe I'll do something for a charity, whatever... but definitely not for someone who just makes mo' money if I deliver more while I get no more and actually the same as those who do less... What would be in it for me?
The only thing the formal review is good at is integrating the assessment of an individual's performance into the company-wide HR machine for compensation. As long as its treated that way by both manager and employee I think it can receive the "democracy" descriptor - it's the worst method apart from all the other ones.
In order to set someone up for success in growth the two sides need to have an actual plan, preferably with a lot of small steps defined in order to provide a greater sense of accomplishment, earlier and more frequent opportunities for feedback, and a more accurate measure of progress as the year goes on.
One thing I tried, back when I was a dev manager, was to define as clearly as possible what it would take for the employee to get from a 3 to a 3.5 or 4 in whatever category. Then monthly or whatever interval I could provide feedback as to how they were tracking towards that goal so you don't get that 'surprise' at the end of the year. It was my attempt at applying the maxim "if something's painful, do it more frequently" to something that I found very painful.
Not surprised to see Buffer mentioned. Seems like a really forward-thinking company. Not sure if they’re right about everything, but they’re definitely trying to question norms.
I know this is an old post, Ben, but I'm curious as to how you and DEV actually handle performance reviews, or if at all? Thanks.
Yep, I'm very curious about all the things they're trying out. I wish I knew of more companies that are trying to question things this way and sharing what they learn.