Entrepreneurs

4 Ways A Strong Performance Review Can Be A Warning Sign

If you scour the internet, you’ll find two perspectives on performance reviews. Those that say reviews drive organizational performance—and those that say that performance reviews are dead.

The truth is in the details. Performance reviews alone will not improve performance, nor engagement, nor productivity. A well-executed review process, however, is a critical element for achieving those desired outcomes. The problem is most are not executed well. So, team members end up with experiences that suggest the performance review’s demise is eminent.

Another internet search will lead to the essentials of an effective review process: clear goals, regular feedback, effective metrics, time commitment, trust. The mechanics of writing the review, particularly how to accurately rate team members, is harder to find.

In my experience managing managers and developing leaders, turning observations of behavior into a tidy number on a scale of 1 to 5, is never easy. Unfortunately, this leads some managers to score everyone in the same range. Others pride themselves on being hard graders and rarely rate anyone above the middle. While others are the opposite, and only use the upper half of the range.

The most common pitfall I encounter is the latter scenario—leniency error—in which managers only rate team members using the top half. While I hope the high scores indicate strong performance, I’ve also learned it can signal potential flags. It means I need to talk with that manager to determine if one of four other possibilities is occuring.

Conflict avoidance

When managers only give high scores, they may be avoiding conflict. They may not want to tell a team member their performance isn’t strong. Or they may not want team members to realize that some people scored higher than others. Scoring everyone high solves this problem for them. A way to address this is to mentally separate the appraisal from what action may need to be taken. For those who suffer from conflict avoidance, this is easier said than done. But as a manager of managers, my role then becomes coaching them to develop this mental discipline and to teach how to have difficult conversations. To gain the benefit of performance reviews, both are necessary.

Misperception about “meeting expectations”

In most performance reviews, the middle of the scale is labelled “Meets Expectations” or “Meets Position Requirements.” Because it is in the middle, this rating is perceived as average. No one wants to be average or have average team members. But meeting expectations is not average. It means the team member is doing exactly what they are supposed to be doing. That doesn’t mean it is enough for a promotion, but it isn’t a negative. Very few people hit every goal completely out of the park every time all year long. Managers need to know an occasional “meets expectations” is normal. Equally important is conveying the same understanding to their team members. Performance reviews allow areas of strength and development to be identified. But they also allow a conversation about when meeting expectations is fine and help team members know where to best focus their energy. 

An unacceptable plateau

If a team member is consistently performing at the highest levels, it is possible the goals set for them are too low. The work may be too easy or there may not be enough to do. Whatever the reason, this may be an employee who isn’t being challenged—and therefore isn’t being developed. This person can likely take on more or different work and become even stronger. Don’t worry about perverse incentives here, i.e., if they work too hard, they’ll be “penalized” with more work. That is why conversations about the work are so important. Managers need to ask their “high performing” team members if they are learning, being challenged, need more autonomy, or want broader responsibility. Consistently high ratings can signal a learning plateau. In some cases though, this might be acceptable, which leads to our final point.

Acceptable plateau

There are times when a team member plateaus, and they are fine with it. They may be at a point where they don’t want more autonomy, nor broader responsibility, nor more challenges. They may like exactly what they are doing. This isn’t necessarily a bad thing. We shouldn’t equate a person’s desire to not constantly grow with lack of performance. If they are performing above your expectations, but exactly at their own, then it is a win-win. It can, however, become a potential problem if their expectations about what you should pay them based on performance doesn’t align with what you can pay for their position. In this case, the rating tells you as much about current performance as it does about the need for a conversation to pre-empt future performance or retention issues.

In all these scenarios, the value of the review is heightened by moving past the numbers to the human being who the number is attempting to describe. The ratings are a launching point for a conversation. They indicate the need to put aside written words and numbers—and start talking. Performance reviews aren’t only about assessing performance. They are about a better understanding of the people on our teams, and often of ourselves. If you look beyond the numbers and use them to spark reflection and generate conversation, then you’ve mastered a piece of the larger puzzle that does improve performance, increase engagement, and drive productivity.

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