Annual Performance Reviews Ruin Everything
There is hardly an area of work, psychological safety, growth, collaboration or equity that annual performance reviews don’t undermine. Think I’m exaggerating? Have I got a (long) post for you….
I’ve been on both sides of performance reviews, receiver for most of my 20+ year career and giver for 4 of the last 6. I’ve also been intimately involved in processes to improve the processes. From first exposure, my experience of reviews was at odds with other messages I was hearing from orgs, so I carefully observed the effects on people, read widely, and talked with other people to make sense of it. The vibe from managers where they still happen is typically “enh, they’re not ideal, but what can you do?” They are rarely taken as seriously in their toxicity as they should be, and this repeatedly causes harm. Hence laying out the case here to coalesce opinion to quarantine and ultimately eradicate them completely.
By annual performance reviews, I’m talking about the activity where a manager delivers an assessment of their report’s performance once a year, compares them to other employees, and ties that to a financial consequence. If we unpack this, we see there is a lot going on: manager, judgment, annual, comparison, consequences.
With every second-order effect from this judgment bundle, you can make a one-by-one excuse or offer mitigations. Especially when you’re in management, you may want to believe that these are merely risks, and you, thoughtful, caring manager that you are, can avoid them. I’m asking you to consider what’s truly in your control, and recognize that even if you shore up your own house, the hill is sliding downwards. Performance reviews introduce dynamics, intended and unintended, that other processes and behaviors have to work against to maintain healthy working environments.
My point is not just that the dynamics are happening, but that they matter. The underlying forces should make a difference to how you treat the structures on top of them. How you diagnose problems, what you choose to build, what additional purposes to use the land for. Knowing what’s going on underneath the performance review can help you make choices about how to approach them, and especially what you should not ask them to do.
Without further ado, 9 ways performance reviews ruin everything:
- Performance reviews reinforce unfairness
Early in my career, I didn’t realize that there was such a thing as a “performance review,” all I knew was my salary did or didn’t go up and someone would tell me why. But I did know that the summary judgements always contained gendered words: positive reviews attributed characteristics to me that I manifestly lacked, like “caring” and “good with people.” Negative parts would cite things — which, incidentally, I was lightly proud of at the time — like “overambitious,” “abrasive,” and “intense.” Since then, I’ve been able to make sense of the gender bias in performance reviews, with a wealth of sources like this article about words men never hear in reviews.
It’s not just gender, of course. Every year we get another crop of stories of organizations claiming meritocracy to justify performance processes that create hostile work environments. Racism and sexism at Uber. Black workers at Amazon. Discriminatory practices from Google. Other kinds of marginalization (disability, language, sexual orientation, religion, body size) are, in my experience, every bit as present as you would expect from the level of bias in the industry, even if they appear less in open discussion.
Some managers and some systems are better than others, but even the better ones still reinforce inequity. Consider the question of who contributes labor for reviews:
If the burden is on the employee to make a case, that runs up against certain groups’ cultural norms or prior socialization against self-promotion. Also, let’s be honest, it is really time-consuming. As such, it disadvantages those with less spare time, again often correlated with various marginalization factors. In other words, it implicitly embeds self-promotion as a reviewable skill and reinforces marginalization.
If, instead, the labor is on the manager, this adds force to the biases that person is already expressing. I’ve seen groups try to systematize this away, but any manager who is trying to make such a process work well inevitably makes it match their prior beliefs about performance level. They try to make it “fair” as they understand “fair” to be. This can only magnify the equity distortion field the manager has already laid down. I’ll say more about this later, but if trying to make something fair only makes it more unfair, then the only way to win the game is not to play.
2. Performance reviews encourage a reductive approach to work
In making reviews “fair,” I mentioned the approach of systematizing away the biases. Leaving aside some bad attempts, like Uber’s famous measurements of fierce and super-pumped, I’ve seen some genuinely good attempts at providing criteria and structure. One thing they all have in common is that they try to distill work to what’s “truly important” to the org.
In other words, performance reviews have to be reductive. The point is to provide comparability across people and roles, so it is literally required that they not take individualized account of strengths and contributions, especially where the contributions are outside the dominant framing of value for the organization.
This is especially self-defeating where an org is trying to promote innovation or diversity. Performance reviews reveal the uncomfortable truth: the organization does not, in fact, welcome dissent, and it is willing to put organizational power behind only a narrow sliver of perspectives. Don’t get me wrong. Full discussion of what the org finds valuable can be a good thing. Given the imperfection of any answer, though, especially for dissenters and changemakers, aligning excessive organizational force behind the result is the problem.
Before you suggest that “originality” or “brings alternative perspective” be evaluated, please take a moment to realize the paradox! There are always more perspectives that get framed out of being valuable than can possibly be framed in, and it still requires a human judge to recognize and appreciate them. No wishing for infinity more wishes — it just breaks down.
3. Performance reviews promote batching of feedback, anchored at an arbitrary point in time.
Little-and-often feedback has largely taken over in the management literature as being most effective for growth (for example, see How Fast Feedback Fuels Performance (gallup.com)). It’s not a new concept; small nudges were already well established by the time Bruce Tulgan wrote Fast Feedback in 1999.
While other feedback cadences can certainly coexist with annual reviews, an annual process inevitably encourages batching up feedback. There’s pull on managers to stockpile, especially where something contentious is hanging unresolved. Forces at play include managerial conflict avoidance, workload, poor second-level management, and pervasive (bad) advice to wait until something is an evidenced problem to talk about it (for a discussion of this, listen to this episode on Giving Feedback as a Manager of the new podcast What We Don’t Talk About). The last thing we need is more forces towards longer timeframes or arbitrary, manager-led timing.
Again, in theory, frequent supportive feedback can run alongside infrequent performance rollups, but where the two come into conflict, the annual review will win out. Of course it will: it affects money and opportunities. In practice, annual reviews draw from the same time and energy well as feedback for growth or development. Even conscientious managers are likely to stockpile feedback when it gets near review time, then frantically work through it, sacrificing intent for speed.
A fixed timeframe works against quality: there will be a recency bias to the feedback, which I believe — again having seen some good attempts — it’s impossible to fully avoid. Important moments don’t distribute evenly around the year, but savvy employees can game the system by ensuring good PR moments in the quarter before. The less manipulative often find their achievements from longer than 4 months prior forgotten and underappreciated.
4. Annual performance reviews undermine intrinsic growth.
This is one of the longest-established criticisms of performance-based rewards. In addition to questionable performance outcomes, what is the effect on learning? The research is pretty unequivocal:
“The use of rewards undermines intrinsic motivation and results in the slower acquisition of skills and more errors in the learning process,” — The Effect of Rewards and Motivation on Student Achievement” by Lori Kay Baranek (gvsu.edu)
“While extrinsic [reward-based] motivation can produce short term-results, that’s, essentially, all it can do. Research shows that the results of extrinsic motivation are weak and can even be detrimental in the long-term.” — Intrinsic and Extrinsic Motivation: How They Affect Students’ Grades — Built By Me ® — STEM Learning.
For me personally, the connection of feedback to rewards makes me more likely treat the feedback as gameable. My automatic reaction is, “how can I move that opinion so that more $$$ comes out at the end?” Unless I really work at it, feedback tied to power just doesn’t engage the same pathways of curiosity, evidence-gathering, and sense-making that have led, say, to things like this blog post.
5. Annual performance reviews reduce psychological safety and increase anxiety.
My instinct to game performance-related feedback is primarily defensive. No matter whether I think the judgment will be positive or negative, I put up walls against the act of being judged. Sure, managers try to frame it as “about the work,” but it clearly is personal. Where it is tied to compensation, a performance review is a statement about a person’s worth to the organization.
On the flip side, it is core to the definition of psychological safety that it is present only when a person can be unafraid of being judged. Performance reviews, which judge by definition, appear to be wholly incompatible with psychological safety. How can one not be afraid to fail, when not only is judgment required by the system, it also has financial consequences? Performance reviews tied to reward make a zero-sum tradeoff against openness, trust, and safety.
Yet again, this reinforces inequity. People who are used to being rewarded in systems are more likely to stride into these situations with confidence. The marginalized, less so. If you’ve never suffered harm in feedback, you may want to take that as an indicator to reflect on privilege rather than evidence that performance reviews are not harmful.
I know this isn’t just me. “Performance review anxiety” is a fruitful web search, and I defy anyone to go into a performance review meeting without an accelerated heart-rate. I can’t point to independent evidence of long-term consequences, but I’ll tell you, most folks I know have a very long memory for managers’ missteps in those emotionally-charged moments.
6. Performance reviews are a blanket exertion of control.
At its core, a performance review is a stark reminder that a manager controls aspects of your fate. Depending on the size of the reward at stake, that manager could be the gatekeeper to precious family time, a house to live in, or quality child care. Again, if you happen to be in a fortunate position where it doesn’t matter, then please remember that you are the exception. For others, this matters, because it genuinely matters.
Now, I don’t take the (frankly quite lazy but common in the tech-industry) position that all power differentials in companies are bad. They exist, and they can be used for harm or good, and using them for good is indeed an ahem opportunity for maturation in our industry. As a rule of thumb, though, good managers don’t attempt to cause growth by force. They take individual experience as both motivation and input, then shape healthy experiences by exerting force on the environment. Let me repeat: good managers usually frame their work as being most on structures, not directly on people.
Fixing people is a problematic mental model. A framing where, instead, the manager creates spaces for people to thrive reserves agency to the individual. The point is simultaneously niggly and semantic, but also fundamental. An agency-preserving framing promotes a healthy feedback loop of opportunity, engagement, learning, and job satisfaction.
The primary reason to exert power over an individual is to protect a healthy environment for others, and therefore should be used only with surgical care and precision. So although the direct use of power is not 100% bad, the idea that it should be brought into play with everyone is a bad fit for most situations.
7. Performance reviews distract from the work.
Reviews are unarguably a distraction from whatever you’re employed to actually do. For reasons described above, they command attention. They add emotional charge, disrupting the equanimity we strive for in a sustainable environment and often trigger unpredictable second-order effects as a result.
Clearly people do need a venue for improving their conditions of employment; I don’t want to imply that people should not take care of their contractual relationship. Like HR procedures, though, performance reviews usually provide an employer-centering way to have that conversation.
By putting the discussion all on the employers’ terms, they can be disempowering. By their batched nature, they can be surprising. Time and energy spent paying down this emotional buildup does trade off against useful progress.
8. Performance reviews undermine teamwork.
This is a very well-documented consequence. Probably the worst approach to performance appraisal is stack ranking employees: creating an ordered list of people for the purpose of rewarding the top and penalizing the bottom. This reward structure obviously undermines teamwork by artificially structuring competition among employees, rather than promoting cooperation. You can read more about its toxicity from reports when Microsoft ended theirs in 2013.
Even without stack ranking, if there is a single budget for rewards, this introduces a competitive dynamic. Again by virtue of being tied to penalties and rewards, the review process undermines anything else a company might say about teamwork. It forces people out of their collaborative mindset by making them collapse contributions into credit and blame, and parceling it out to individuals.
For a period of time during a review process, the org implicitly encourages every individual in every group setting to think selfishly, rather than focusing on creating conditions for a whole team to grow and improve. Again, I feel like I’ve seen this at its best — even cases where folks attempt elevate each other via the review process — but attempts inevitably founder on the final reason performance reviews ruin everything:
9. Performance reviews individualize systemic failure and success.
Either a performance review judges people by things solely in their control, which is “fair” but fatally reductive, or by their effect in the org. But anything — anything — which judges people by their effect on a system makes them take individual responsibility for things which are, by definition, not their sole responsibility.
Take the Amazon article’s deconstruction of “Earns Trust.” Whether a person can build trust with people is, yes, a result of their behaviors in part, but it is even more a result of what the system allows. As Deming’s famous quote has it, “a bad system will beat a good person every time.” How then can this be compatible with individual performance reviews?
I have seen enough cases where “performance” is materially changed by the team conditions to have totally shattered any illusion of performance as an assessable individual attribute. No performance review system takes appropriate account of how well the organization itself has done in creating the conditions for success. How well are others tending culture? Creating safety? Conveying context and constraints? How well has the org done at steering people into the places where they’ll be successful and supporting them once they’re there?
Performance reviews, by refusing to acknowledge the role of context, allow bad systems to persist, tacitly conveying that the wider system is inevitable and must be accepted. Reviews often correctly diagnose challenges, but put responsibility inappropriately back on an individual, blaming them for their own marginalization or ineffectiveness. They take a person’s failure to be heard and give advice that they could have communicated better. They tell silenced people that they should speak up. They take people whose time has been time-sliced into ineffectiveness and recommend improving their time management. This advice is not necessarily wrong, but it transmits an expectation that if they work hard enough, the individual can change the outcome, without any requirement for change or support on the system side. Again, a super-switched-on manager can do something about this, but a performance review framing makes it harder, not easier.
On the positive reinforcement side, performance reviews call a person “successful” when their work is appreciated and adopted more widely, but who is really more responsible for that, the person creating the work or those adopting it? People who are accustomed to being validated (which typically includes those who make it into management) often think via motivated reasoning that responsibility is primarily with the individual. And thus the performance review systems self-perpetuate, despite ample evidence of their role in harm and marginalization.
Show me a way to adequately integrate systemic context, and I will re-engage with performance reviews as a concept. Until then, I’m out.
So what did I do when I was responsible for executing these processes? I certainly felt pressure not to openly undermine the process itself (which is why this post is coming now when I’m, at least temporarily, not in management). This is what I recommend:
- Keep performance processes rigorously separate from growth feedback. I even refused to collect any growth feedback during the review period, because cross-contamination was inevitable.
- Reduce the penalties/rewards associated with the process, and contain your investment (time and attention) in them proportionally.
- Acknowledge continuously the ways that the process is problematic.
- Strive to make them less toxic, but keep ambitions in check, lest you or others become overly vested in the process. You can only make them less toxic, never actively health-promoting.
- Advocate to drop them entirely, replacing them instead with smaller-scale feedback and better support for managers.
And I wish you the best of luck in your performance journey!
