How to give better employee performance reviews? Don’t.

Our take on how to give better employee performance reviews – and what to consider instead.

“How to give better employee performance reviews?”

This is a question I’ve consistently received over the years, and becomes more pronounced as we enter performance review season.

It’s a particularly salient question given that, from our August 2020 survey of 1,087 managers and employees, 86% said they hold performance reviews – but only 23% of those people said they were “satisfied” with their performance review process. 

In short:  86% of us are doing something that only 23% of us like.

It’s worse than you think.

Not only are a majority of us implementing a process that we’re not satisfied with, but the utility of the process itself is dubious:  

A 2019 study by Mercer found that only 2% of companies believe feel their performance process delivers exceptional value. In fact, Gallup shared how “traditional performance reviews and approaches to feedback are often so bad that they actually make performance worse about one-third of the time.” They further discovered that “only 14% of employees strongly agree their performance reviews inspire them to improve.”

Yet, we still do performance reviews. 

We do them even though we feel like we’re twisting people’s arms to complete them. We do them even though we dread filling them out, ourselves. 

How did we get here? And, most importantly:  Is there a better way?

A long and winding road.

How did we get here?

Around World War I, performance reviews were first introduced as a rating system to help the U.S. military identify and dismiss poor performers. It was a tool to help with succession planning that was not shared with the soldiers and officers being evaluated. The original intention of performance reviews was to help the organization – not to help the individuals themselves grow.

Fast forward to the present and our thinking has changed. Today, many companies want their performance reviews to be a tool used to give feedback and to an employee, so they can know how they can get better. In our survey with 1,087 managers and employees, we found 70% believed the primary purpose of reviews in an organization is to help a team member develop.

However, traditional performance reviews are oftentimes simultaneously used to determine promotion, compensation, and raises. Other companies use them as a tool used for legal protection and to justify future firings.

No wonder we can’t quite seem to have performance reviews that feel good or are useful:  It’s unclear for many organizations what the original purpose of the performance review – let alone what we should try to optimize for – is in the first place. 

As a result, we’re left with a system with gaping problems when we think about how to give better employee performance reviews. Here’s what those exact problems of performance reviews are.

A broken process, with 6 distinct problems.

Here are the primary problems of performance reviews…

“So, what’s this really for?”
Performance reviews try to do too many things at once. Many teams will use performance reviews to do some mix of the following:

• offering advice on how to improve
• setting an employee’s bonus or raise
• deciding on a promotion
• justifying a future firing

Unfortunately, this diluted focus leads to the performance review not being able to do any of these things well.

“Are you judging me, or coaching me?” 
Most performance reviews are tied to compensation and/or ratings. In our survey, we found that 63% of 1,087 people surveyed said that their performance reviews were tied to compensation. While popular, this backfires. This means the minute you try to offer feedback during a review, the person on the other side is bracing themselves for whether they got a raise or got promoted… not, “Oh is this feedback I should internalize in some way.” In fact, studies show how rankings trigger a fight-or-flight response in the brain. When performance reviews conflate growth with judgment, it damages the likelihood of growth. 

“I wish I would’ve known this earlier.” 
Performance reviews are a one-time instance. This means the feedback that’s given is imprecise and/or too late to truly matter, as it’s been built up over the past year. Or, the feedback has been completely absent and hits the other person like water from a firehose: In fact, many organizations, it’s “the only time where they can force managers to give feedback.” 

“I have no idea what to do with this.” 
Poor delivery by the manager and/or the organization often lead to botched performance reviews. Managers haven’t been trained to give effective feedback. HR managers believe 8 in 10 managers have skill gaps in giving feedback and coaching, and only 14.5% of managers strongly agree that they are effective at giving feedback.

“Where is this coming from?” 
There are few worse feelings than the feeling of injustice. That you’re being wronged. Performance reviews conjure this for many people:  According to Gallup, only 29% of employees strongly agree that the performance reviews they receive are fair, and 26% strongly agree that they are accurate. This is there is complete opacity in where this feedback is coming from (44% of performance reviews are anonymous in some way), and the review is delivered in a singular direction rather than having a multidirectional conversation (52% of people participate in manager-to-direct-report reviews only). In the end, it’s awfully frustrating.

“Sheesh, this takes forever.”
In a study by the advisory service CEB, the average manager reported spending about 210 hours — which is close to five weeks of doing performance reviews per year. In our survey, most people reported that their performance review takes more than two weeks to implement, with 66% of managers spending 4 hours or more to complete them – with 13% spending 12+ hours. That’s longer than some projects, themselves. One could only wonder how much energy could be directed toward the work itself with that amount of sheer effort and time.

Attempts at rethinking performance reviews.

As a result, many companies sought to reinvent the performance review. GE, Adobe, GAP are just some of the companies that have transitioned away from traditional performance reviews to figure out how to give better employee performance reviews.

What have they moved toward? 

• Frequent one-on-one conversations between managers and direct reports. At GE, these are called “touchpoints” that focus on two questions: What should I keep doing, and what should I change? At Adobe, managers hold quarterly “Check-ins,” that are forward-focused conversations. At Gap, they call their system “GPS” – “Grow. Perform. Succeed.” It encourages 12 informal conversations throughout the year that focus on three questions: What went well? Where did you get stuck? What would you do differently next time?
• Ongoing, real-time requests for feedback by anyone. GE, IBM, and Amazon all have internal apps each company has developed they use to both invite and give feedback to peers – even outside their team or division.
• Removal of stack rankings or ratings. Many companies, including GE and Adobe, have completely eliminated any kind of numerical ranking or ratings from their performance review process.
• Compensation determined by a separate process. A compensation and promotion discussion is often held separate from these coaching conversations. At Gap, these conversations are held once a year, and managers are given a detailed model to match compensation with performance. Similarly, at Google, these conversations are separated by a month: In November, a conversation about performance is held, and in December, a conversation about compensation and role changes is held. At Netflix, they take a completely different approach: Compensation is purely dictated by the market rate, with Netflix paying its staff always top of market instead of allocating bonuses.

Results of moving away from traditional performance reviews have been positive for some companies:  Adobe reported a 10% increase in the number who say they receive ongoing feedback that helps their performance, and Cargill found “overall, 90 percent of the no-rating pilot participants reported, year after year, that their experience was positive.”

However, outcomes are not entirely uniform nor conclusive across the board. Some companies have tried taking steps to revamp their performance review – only to resort to reinstating them a year two later. Other companies have chosen to retain certain elements of their traditional performance reviews.

Why is this? Are there certain elements of traditional performance reviews that some companies still find valuable?

Not throwing the baby out with the bath water.

Some companies, like Facebook, are holding on to a version of the performance review that incorporates ratings and tie it to compensation. Facebook in particular found in a survey with 300 members of their own staff that 87% of employees wanted to keep performance reviews. (Facebook’s performance reviews include peer reviews that are delivered by managers that denote a certain rating and are a part of a compensation discussion – with a formula used subsequently to determine that compensation.)

Similarly, companies such as PwC and Deloitte, have maintained parts of their performance reviews as a way for how to give better employee performance reviews:  PwC gives ratings to their employees across five competencies, while other companies like Deloitte assign them one of four categories that provide a “performance snapshot.”  

Here’s why some companies retain all or certain elements of performance reviews for the following reasons…

• Quality of manager conversations can go down in the absence of ratings and/or formal performance reviews. Research performed by CEB with almost 10,000 managers revealed how the lack of ratings in performance reviews reduced employees’ perceptions of manager conversation quality by 14%. That is, without ratings, managers struggled to tell employees exactly how they could be performing better. This shows that eliminating ratings doesn’t solve everything: You have to still equip managers to communicate cogently and clearly feedback to their direct reports.
• People want to know where they stand. One study shows how uncertainty can trigger intense neural reactions, particularly in highly anxious people. Not knowing if you’re doing well or poorly can interfere with strong performance. However, this clarity of how well someone is doing is something that absolutely a manager should be communicating in their one-to-one conversations. Ratings merely serve as a proxy for a clear message – they are not a requirement for one. For instance, Netflix helps their staff understand where they stand without a numerical or categorical ranking by encouraging their staff to ask the question, “Would you fight for me if I were to think about leaving?” They call it the “Keeper Test.”
• Bias happens when a feedback prompt is too open-ended – or training/support is not provided. Many studies show how “without structure, people are more likely to rely on gender, race, and other stereotypes when making decisions.” Idiosyncratic rater effect is perhaps the most pernicious and widespread of biases in performance reviews: Studies have famously revealed that 61% of the feedback you give is a reflection of you, as the rater, rather than the other person. As a result, some companies find that having more structure (i.e., ratings) to prevent bias. But the effectiveness of this has been debated, as bias appears even when ratings are present. To alleviate bias doesn’t mean we must resort to ratings or re-adopt the formal performance reviews. Rather, it shows how structure and training are necessary around (1) how to give feedback constructively (2) the perils of bias in feedback and how to minimize it. For example, better prompts for feedback, training around framing feedback more objectively, and reading through the feedback for consistency can help for how to give better employee performance reviews.

Whew, this is a lot of information. Clearly, there are trade-offs to weigh and scenarios to consider when thinking if and how to do performance reviews in your company. 

However, if there is one, most meaningful insight to zoom in on, amidst all the noise, it is this…

Reorienting around what matters: The Interaction.

When we try to imagine how to give better employee performance reviews, we’ve become too fixated on the process – how often the cycles should be, how many people should review each other, how many core competencies to evaluate, which tool to use, if the questions should be drop-down or radio buttons – rather than focusing on the core interaction between team members. 

The interaction matters most. At the end of the day, the most important outcome of the performance review is that it helps your team work better together.  As organizational theorist Edgar Schein defined, teamwork is the development and maintenance of helping relationships amongst all members of the group. In short, positive interactions facilitate better teamwork.

A helpful interaction is one where your team member is willing to tell you, to your face, objectively and kindly what could be better and how you can improve. It’s an exchange of feedback where the suggestion is received in a non-defensive way, where the person chooses for themselves the actions to take to change their behavior in the future. These helpful interactions should occur at all levels in an organization, and as frequently as possible. 

Focus on the interaction – the connection, dialogue, and information and delivery of that information between peer to peer – and everything else about the performance review becomes dressing. 

As a result, as leaders our focus should not be on answering, “What should our performance review process be?” or “How to give better employee performance reviews?” but rather:

“What is required in the environment to increase the likelihood of helpful interactions?”

Here’s the answer:

(1) Safety supports success. Much has been written about Amy Edmondson’s famed research on psychological safety being the most important aspect that high-performing teams have in common. That is, you have to create a foundation of trust that makes it safe to speak up and have helpful interactions, in the first place. This includes being vulnerable about needing feedback in the first place, appreciating the feedback you’re receiving publicly, and employing what  Daniel Coyle writes in his book, “The Culture Code” of “belonging cues” such as eye contact, body language to create this sense of safe connection.

(2) Invite, don’t impose. Only 26% of feedback is found to be valuable by employees – and a large determinant of this is because the feedback is imposed, rather than invited. Encourage your team members to ask for feedback, as there’s a higher likelihood that the feedback will be internalized. 

(3) High-frequency routines. Research supports that delays in feedback hurt performance and learning, especially around course correction. The more you can give feedback closer to the moment it happened, the more likely it will positively change behavior. At the same time, it can be hard to carve out the time to give live feedback in the day-to-day rush of work – and it can also feel unnatural and stilted. As a result, creating high-frequency routines – a time and place to give and receive this feedback that is structured and well-supported – at minimum once every two weeks is critical.

(4) Multidirectional, not unilateral. The interaction cannot be an opportunity for growth and improvement if it is one-sided. As a result, feedback should not just be collected and aggregated by managers only and direct reports, but enabled peer-to-peer. A huge reason that managers get caught in a tight place with performance reviews is that they have to triangulate feedback from one team member to another… and get caught in the middle. Instead, offer your team ways to provide peer-to-peer feedback, and equip everyone – not just your managers – with the tools and training to give and receive this feedback well.

(5) Practical training. For many teams, this is the biggest missing piece: Training that helps team members give actionable, objective feedback, and receive feedback in a productive way. As cited earlier, only 14.5% of managers strongly agree that they are effective at giving feedback. But it’s more than just watching a video course on feedback and calling it a day – it’s giving your team tactical scripts and templates they can use for giving and receiving feedback, and scenarios they can practice.

Ready to put this into practice, and have this environment become a reality for your team? Read on…

From theory to practice.

Here’s how to implement these principles into action:

(1) Commit to the interaction. Not a tool, not a process, but to better the interaction between team members. This likely means you will need to:

• Ensure that your performance review process is about performance feedback, rather than succession planning. In short, it’s about growth, not judgment. You can build in a succession planning model and compensation model and promotion on top of this. But the interaction is the most important thing to get right, first.
• Establish a separate discussion/system from performance feedback. See the Footnote [1] for how other companies do this.

(2) Call an all-team meeting together to talk about this renewed commitment + focus on feedback. 

• Use this meeting to build trust and get people feeling comfortable being vulnerable.
• Ask: “What’s the most challenging piece of feedback you’ve ever received in your career and and why?”
• Follow up by writing out why focusing on feedback is so important to your team.

(3) Give training + resources on how to best give and receive feedback.

• Partner with us here at KYT to deliver a custom training around feedback. You can drop us a note here.
• Share our “Guide to Giving Feedback” in KYT. (You’ll need to be a KYT subscriber in order to access this.)
• Watch our “Giving and Receiving Feedback” module from our training program in KYT.
• Check out our free resources on giving and receiving feedback:
  • Watch our Skillshare class on giving and receiving feedback
  • Read “Giving feedback remotely”
  • Read “When to give feedback”
  • Read “19 phrases to help make giving difficult feedback easier”
  • Read “How to deliver negative feedback well”
  • Read “Five ways to receive feedback well”

(4) Nudge your team to actively invite feedback – rather than waiting for folks to give it to them.

• This can be implemented as an email that you manually send to your team, or a weekly or biweekly Slack prompt you share with your team.

(5) Hold 1:1 meetings every 4 or 6 weeks that are exclusively focused on performance feedback. 

Here are examples of what the agenda could say:

Personal connection (~10 minutes) 

• How is your energy level these days?

Performance feedback (~40 minutes)

• When we last chatted ____ was an improvement area for me. How do you think I’ve been progressing in that area?
• What about my management style can I improve? 
• What aspect of my job do you think I can do better? 
• Would you be open to me sharing some performance feedback and opportunities for growth for you?
• Do you mind me sharing a few small observations on what I think could be better?

Takeaways / next steps (~10 minutes)

(5) Give monthly shout-outs for the feedback that has been most helpful.

• Every month, you’ll want to appreciate folks for the feedback that they’re sharing. This is a powerful way to indicate that feedback is not only welcomed, but it is thoughtfully considered, and acted on when appropriate. The more you can appreciate the feedback publicly, the more you encourage your team to continue to share feedback. 
• Share a shout-out about feedback you’ve received at your monthly all-hands meeting. 

In sum

Our KYT recommendation for how to give better employee performance reviews is to reorient the performance review to be centered on the one thing that makes a difference:  The interaction.

The process, all together, looks like this:

1. Focus on the interaction.
2. Remove compensation from feedback.
3. Establish safety in the environment.
4. Provide training on giving and receiving feedback.
5. Prompt ongoing invitations for feedback.
6. Hold monthly performance-feedback focused 1:1 meetings.
7. Share monthly feedback shout-outs.

With this methodology + tool, our hope is that there will be…

No more, “I had no idea…” Feedback will be timely, and not a surprise. Feedback is actionable and precise, rather than a vague, arbitrarily assigned scale of “meets expectations, etc” 

No more he-said-she-said. Feedback comes directly from the source, not weirdly accumulated and triangulated in a black box way.

No more huge time suck. Some 10-week process that only leaves you with a vague sense of what you could be doing better – but nothing specific.

A process that helps your team do the one thing you want it to:  Work better together.

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Footnote

[1]  How other companies separate performance feedback from a compensation decision or system:

• At Gap, compensation conversations are held once a year, and managers are given a detailed model to match compensation with performance. 
• At Google, the two conversations are separated by a month: In November, a conversation about performance is held, and in December, a conversation about compensation and role changes is held. 
• At Spotify, a career path is made transparent to team members. Promotions are determined “when you and your manager agree that you are consistently operating at the next step. Specifically, promotions do not need to be tied to the annual salary review cycle.”
• At Buffer, a transparent salary formula is used to calculate compensation.
• At Netflix, a completely different approach is taken: Compensation is purely dictated by the market rate, with Netflix paying its staff always top of market instead of allocating bonuses.

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📚 To read more on our methodology read our Guide to Rethinking Performance Reviews.