Performance Reviews: Are They Helping or Hurting Your Company?

Posted by April Parks, M.S. Conflict Management

Sep 10, 2015 11:00:00 AM

performance-reviewThere is something to be said about the value of performance reviews in the workplace. They can be useful for employers because they are able to offer insight and guidance to employees when they are struggling in a certain area and can help employers decipher where a person is strongest, so as to contact that person when a specific skill is needed. Performance reviews are also helpful for employees.  Getting feedback from managers about how they do their job allows them to sharpen their skills where needed and gives them a sense of worth when their performance is praised. When employees receive feedback, they feel their work is noticed by managers and that their efforts aren’t just for nothing. It boosts morale and creates a happy positive working environment.

Some performance appraisals though, could be ruining your workplace and causing your employees to leave the company. For instance, let’s take a look at using the bell curve for performance reviews, a method that’s been around for quite some time.

Using the bell curve, employers are forced to put employees into three ranges: high performers, average performers, and low performers. The curve is a representation of what statisticians call “normal distribution.” It says that there is an equivalent distribution above and below the average. It presumes that there will always be an equal number above the average and below the average with a low amount of people two standard deviations above and below the average.

Unfortunately, research shows that the bell curve doesn’t follow human performance. It’s an inaccurate representation of how people actually perform, which for employees, leads to low morale, less productivity, and increased turnover, none of which are conducive to a successful workplace or company.

One company in particular, Microsoft, used the bell curve method to rank their employees. Many employees there quoted this system of ranking as “the most destructive process inside Microsoft, something that drove out untold numbers of employees.” Because their evaluations were every six months, workers only focused on the short term goals so as to stay out of the bottom on rankings. Employees set aside long term goals and opportunities for innovation because they were too consumed by a faulty system of performance evaluations. 

So, employers want to have a happy, dedicated workforce. Their goals should be to have employees that think long term innovation, not just short term goals. One example of a better alternative to the bell curve method is 360 performance reviews. This system of review is used more as a developmental tool, rather than a ranking system. It allows employees learning opportunities and gives them constructive feedback to sharpen their professional skills. It deters managers from playing favorites with employees as well, because everyone has a voice in the process.

The 360 performance review motivates employees to do better, it recognizes their contributions, and allows employers to reward those who really are performing well. Unlike the stacked reviews, this method will increase morale and innovation. When employees are happy, they want to stay with their employer. Therefore, a performance review that helps to increase innovative ideas, collaboration, and retention is a far better choice than the rank and yank system known as the bell curve that does the complete opposite.

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Topics: Performance Management