How Performance Reviews Can Kill Organizational Culture

I’m an unabashed fan of Shane Parrish and the Farnam Street Blog. I study everything they publish, listen to every podcast, read every article and book they reference. It is the single smartest site I have ever found, I encourage everyone to visit and learn on a regular basis.

So it was interesting reading a post, “How Performance Reviews Can Kill Your Culture” I found myself both agreeing with, but strongly disagreeing with the discussion in the article.

First, most every organization does a terrible job with the performance review process. We know the litany of complaints, bad implementations, poor communication of expectations, poor or no coaching for performance improvement, poor/misguided review process, and meaningless reporting to keep HR off our backs.

Most performance management systems are broken from day 1 and become less relevant over time.

Somehow, we must make them more relevant, more useful, more fair if we are ever to drive sustained performance improvement, or create workplaces where people thrive, feel valued, contribute, and grow.

But, uncharacteristically, the thinking of performance reviews presented in the article is very simplistic. It basically poses two extremes:

• The dysfunction of the stack ranking/comparative performance review process.
• The evaluation of the individual against past performance: “Did they get better?”

Let me address the second first. Without a doubt, we want to create organizational cultures around continuous improvement and learning. We want people who strive to constantly improve and get better.

Part of every performance evaluation should be “have they learned, are they better?” The individual that does not continue to learn, improve, or grow, will not be competitive in the changing markets, needs, or requirements for success in the future.

But the evaluation of “did they get better,” is insufficient. Getting better is meaningless if the person is still underperforming. If the person is not competitive for current and future needs for job success, we do them, our customers, and our organizations a disservice.

I get how the comparative review process can become very dysfunctional, but I think that’s less an issue of the comparative process and more how we manage/implement the process. I’ve seen and been part of many organizations that harness this process very constructively, helping individuals and the organization grow and improve.

Let’s face it, we live in a comparative world! We evaluate alternative vendors, we evaluate alternative employers, we look at competition, other companies/organizations. We evaluate and make comparisons in virtually everything we do. We evaluate our friends, families, co-workers, and just about everything we can.

Sometimes those comparisons are fair, objective, even constructive. Sometimes they are not and there is no attempt for any fairness, objectivity, or constructiveness. We are as guilty of doing these things to others as they are guilty of doing to us.

Many of us, perhaps, most compete with others, trying to improve ourselves, or at least our self-assessment. Again, some of this is healthy/constructive, some is dysfunctional.

But to ignore these comparative processes is to ignore reality—human nature, how organizations, and societies work, how individuals, organizations, and societies grow and improve.

Our goal as managers and leaders shouldn’t be just evaluating, “Are you better today than you were yesterday,” but also harnessing comparative assessments in constructive ways, helping both the individual and organization grow.