Blog post

5 Dirty Secrets of Performance Reviews

It's time to shed light on the hidden truths that make performance reviews superficial instead of productive.

Traditional performance reviews are hurting—not helping—companies and their employees. 

There are a number of reasons why traditional performance reviews are hated by employees. Office politics. Subjectivity. Manager ratings that don’t accurately reflect true performance. 64% of employees see them as a partial or complete waste of time, according to People Matters

What’s really going on? There are certain sad realities with performance reviews that don’t get talked about enough. It's time to shed light on a few of these hidden truths that make reviews superficial instead of productive.

Secret #1

Your manager ratings are wrong

Manager ratings don’t accurately reflect employee performance. The College of Management at NCSU found that more than 60% of their rating can be attributed to their own idiosyncrasies. For example, an employee may receive a lower rating because the manager evaluates them based on the manager's perception of their own ability to do the same work. In addition to idiosyncrasies, research conducted by Confirm found that managers under or overrate direct reports about half the time. 

With the advent of remote and hybrid work and tools like Slack and Zoom, managers simply don’t have the visibility they used to into the true impact their direct reports make at work. Relying on manager ratings, or cherry-picked 360s, means you’re making talent decisions based on an incomplete view of employee performance.

Key insight

The world of work has changed. What hasn’t is how we measure performance. Companies measure employee performance based on how work was done 100 years ago when managers had full visibility. Relying on manager ratings only back then made sense. Today, not so much.

Today, work is collaborative and cross-functional. Employees work in networks, which means people leaders need data from these networks to better measure impact. Organizational Network Analysis (ONA) provides a view of an employee’s impact on the entire company. When added to performance management, it generates the network data HR leaders need to promote, PIP, and compensate the right employees.

Secret #2

Managers don’t actually read self-reflections

Whether in Confirm or any other performance tool, we routinely see managers breeze through their direct reports’ self-reflections. Managers miss a valuable opportunity to identify where they can make the most impact as a mentor and coach. But this is only part of the problem.

According to our data, while the average employee spends about 7 1/2 minutes writing a single long-form self-review question, their manager spends an average of 8 seconds reading it. Why do we force employees to complete long self-reflections? While well-intentioned, they’re a waste of time.

Key insight

Self-reflections serve a purpose. But, similar to resumes, they’re often overinflated, giving managers little signal. ONA data, on the other hand, paints a clearer picture of employees' strengths, their impact, and areas requiring extra help based on feedback from the people all around them.

Extracting insights from work networks gives more signal to managers to use when guiding their direct reports’ professional growth.

Secret #3

Talent follows a power law, not a bell curve

When companies run performance reviews, they produce a bell curve of manager ratings. This bell curve—known as a “normal distribution”—shows about two-thirds of employees as average, or “Meeting expectations.”

Bell curves are what you get when you measure additive variables. These are variables that don’t affect one another, like height, or IQ. In the early days of performance reviews, a bell curve made a lot of sense. Work was solitary and repetitive. But it isn’t anymore. In a typical knowledge worker organization, 10-15% of employees will produce 50% of the impact.

Key insight

Talent follows a power law, not a bell curve. Work today isn’t solitary or repetitive—it’s creative and team-driven. There’s a lot of variability in how employees plan a marketing campaign or design a new software feature. That’s why we have “10X” software engineers. Or account executives who 3X their quotas and find time to lift the rest of the team up too. That means we shouldn’t measure additive variables anymore, but multiplicative ones.

Measuring performance with ONA generates a power law. Research shows that impact in an organization distributes in power laws, not bell curves. A power law reveals the true 10-25% of employees making a disproportionate impact. These are the mission-critical employees companies can’t afford to lose.

Secret #4

Your career advancement relies on your manager’s ability to advocate for you

Employees may think their performance leads to promotions. But what they may not know is promotions are largely based on their manager’s ability to advocate for them in calibrations. 

An employee with a vocal or influential manager stands a better chance of getting their promotion pushed through. When there’s a limited number of promotions to give out, the employee with a manager who isn’t a great advocate will miss out on advancement opportunities.

Key insight

Career advancement shouldn’t be left up to a manager’s ability to advocate. The employee’s impact should be the determining factor for promotion.

ONA empowers managers and employees alike. It spotlights employees across an organization who are doing exceptional work, so there's less of a need for managers to be great advocates. It arms any manager to set up their employees for success in calibrations. With ONA, the data does the talking.

Secret #5

Your relationship with your manager will often matter more than your actual impact

An employee can be crushing it at work, but if they don’t have a great relationship with their manager, guess what? They’re likely not getting promoted. 

This is why Sally from marketing who's skilled at managing up always seems to be getting ahead. Or why Joe from accounting who’s best buds with his manager seems to be climbing the ladder quickly.

Is it possible that Sally and Joe are climbing the corporate ladder because they’re performing well and not because of the relationship they have with their manager? Absolutely. But can it also be true that they can get ahead despite poor performance because their manager likes them? Yes. There lies the problem. 

Key insight

Managers have the ability to make or break careers. All it takes is a negative experience with a direct report and suddenly the manager is in no hurry to promote this employee.

Having great relationships with colleagues is always a good thing. But an employee shouldn't be passed up for promotion just because they're not their manager's best friend. ONA ensures impact is recognized irrespective of an employee's relationship with their manager, facilitating a fairer performance review.

Let’s face it: Traditional performance reviews are riddled with problems. Employees hate them and HR leaders don’t like their heavy administration, among other reasons.

The world of work has changed. It's time we measure performance with a focus on fairness and impact, leaving behind the subjectivity, bias, and office politics that has plagued the process, for good.

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