What is a Performance Reveiw

Alternative performance reviews

The best performance reviews let managers and employees communicate -- share ideas, opinions, and information. Unfortunately, most traditional reviews put managers into the position of uncomfortable judges, ostensibly telling employees how their work either fit the bill -- or didn't. Possibly because of this, most traditional reviews are no better than the manager's off-the-cuff judgements, and some may be illegal.

Because of these problems, new types of reviews are coming into play. Most require that evaluations be done not for raises, promotions, or bonusses, but for growth, development, and communication. The most important aspect in every case is communication between the employee and other people, instead of one-way communication, for higher performance.
Problems with traditional systems

Michael Rigg, of Fluor Daniel, (quoted in Industrial Engineering, August 1992) said that traditional evaluation methods damage teamwork because of the focus on supervisors evaluating individuals; they may "strip people of their sense of control." Rigg also said that evaluations should provide feedback to individuals so problems may be corrected and higher performance can be rewarded.

In traditional reviews, the manager tells the employee how they measure up, assuming that they both perceive the employee's job the same way. New forms of review may help managers, employees, peers, and customers to gain a mutual understanding of what they mean by "good performance." This may improve the work of everyone involved, while clearing up disputes.

Most managers tend to rate their employees a bit higher than they would normally deserve, leading some companies to use ranking systems - but ranking has its own problems.

Generally, traditional reviews are good at sniffing out excellent and very poor employees, but don't differentiate well among the vast middle ground. This is a problem when reviews are used as the basis for salary adjustments and bonuses, unless only people at the extremes are treated differently (e.g. everyone gets a 4% bonus except very poor employees, who get nothing, and excellent employees, who get 6%).

With traditional reviews, employees are rated by a single person, who may be biased or have an incomplete view of their work. Alternative methods provide a more balanced view.

Other problems with traditional evaluation systems include rater carelessness; use of appraisals for political or personal reasons; the halo effect, where an employee's strengths in one area are spread to other areas; and leniency and strictness errors, where all employees are rated either high or low. Newer systems avoid most of these problems.
Peer Reviews

A peer review program may be designed by a task force of three to six workers, to set the goals, benefits, and objectives of the program; design a criteria-based performance evaluation system; and conduct a pilot program (Training and Development, June 1992). During the pilot program, people may be encouraged to provide feedback on the system itself. Training and support should be available. Pilot programs are very important for any new system, because they let people iron out the bugs without letting the program lose credibility among other workers.

Peer reviews often have a high level of worker acceptance and involvement; they tend to be stable, task-relevant, and accurate. By helping peers to understand each others' work and by airing grievances in a non-threatening manner, peer reviews may also help people to get along better. For the organization, this means higher performance. For the people, this means a better place to work and less frustration; it may also help people to concentrate less on politics or working around people, and to spend more time on their work (or to put in less overtime).

Peer reviews may work best if all parties know that the reviews will notbe used for setting pay, promotion possibilities, or disciplinary actions. However, a peer review system with the power to give promotions, raises, or disciplinary actions might be workable in some businesses, if the employees think it's a good idea.
Self-Reviews

Self-reviews are based on the idea that employees are most familiar with their work, and that their involvement is essential. Employees rate themselves on a number of criteria, usually with a formal survey form, and suggest improvements. They help to clarify their own goals, and expose areas of weakness so they may be worked on. The manager may be left out of the process, although an exchange of views between the worker and manager may help their relationship, and boost the employee's own understanding.

Herbert H. Meyer (Academy of Management Executive, 1991) said that self-review changes the role of the manager to counselor, rather than judge - a role from which the manager can do more to support people. He wrote that self-review "...enhances the subordinate's dignity and self respect." Involving the employee as an equal in the review process is more likely (according to Meyer) to increase commitment to action plans, making the entire process both more satisfying and more productive.

Self-reviews tend to have low halo error and result in little paperwork for managers. However, people may not see their own deficiencies as others do, so self-reviews should be used alongside other methods.
Upward Assessments

Upward assessments are used in a large number of organizations, running from Honda and Chrysler to Motorola and NASA. These programs tend to be somewhat shocking to managers at first, but, if designed well, they can result in strong improvements. The rated managers become the program's biggest fans. Amoco's Bill Clover described this as the "SARAH reaction: Shock, Anger, Rejection, Acceptance, Help" (Training, March 1993).

Most managers do not realize that what they say sometimes does not match up to what they do. Upward assessments can help managers to keep their words and actions consistent, while showing areas where managers can improve their performance. This can greatly increase their credibility.

The process is more important than the survey form; it can't be successful unless both raters and managers "open up." Managers must be helped to accept and deal with the results of the assessment. Outside consultants may have experience, needed skills, and an "objective outsider" image, so people can open up to them without fear of reprisal.

Upward assessments may only be run with managers who have three or more direct reports. Someone other than the manager and ratees must assemble the completed survey forms into a report for the manager; some survey publishers do this.

Many consultants recommend using upward assessments at least every four years. This helps managers to check their progress and refreshes the findings of the past survey in their minds; however, it doesn't make the cost unbearable.

Once the assessment is completed, participants should be guided through their data — ideally, making their own interpretations of it so they have ownership of their conclusions. The consultant should be present to help correct misunderstandings, focus attention on action and interpretation rather than blame and diversion, and to then guide the conversation to action steps. These should be in some way observable or concrete and have definite milestones and deadline dates, which are followed through by the manager or supervisor.

The manager or supervisor’s role can vary. In general it is best of sharing of the actual numerical results is left to the person being “rated,” with the manager or supervisor receiving a brief summary from the consultant to aid in following through with action plans. The action plan itself should be shared with the manager or supervisor, who should take on the follow-through process, scheduling meetings over the upcoming months to review progress.
360 Degree Feedback (360 Degree Review)

360 degree feedback is the most comprehensive and costly type of appraisal. It includes self ratings, peer review, and upward assessments; feedback is sought from everyone. It gives people a chance to know how they are seen by others; to see their skills and style; and may improve communications between people.

360 degree feedback helps by bringing out every aspect of an employee's life. Cooperation with people outside their department, helpfulness towards customers and vendors, etc. may not be rewarded by other types of appraisal. This system also helps those who have conflicts with their manager.

360 degree feedback generally has high employee involvement and credibility; may have the strongest impact on behavior and performance; and may greatly increase communication and shared goals. It provides people with a good all-around perspective.

The Managing Individual Effectiveness (MIE) system at Bellcore is used for self-development. It gets feedback from peers, managers, subordinates, and the ratees themselves. According to a Bellcore representative, the results are better working relations; better communications; more information on management performance and style; increased effectiveness and productivity of individuals and the organization as a whole; knowledge of training needs; a better grasp of organizational priorities; and greater employee input in designing self-development plans.

The Bellcore rep noted that, for success, expectations must be communicated clearly; employees must be involved early; resources must be dedicated to the process, including top management's time; confidentiality must be assured; and the organization, especially top management, must be committed to the program. This system requires a third party, such as a consultant, to begin the process, which may take months to start up.

360 degree feedback may be given directly to the employees, who have the option of discussing them with their managers; or it may be given to the managers for use in a feedback meeting. Whichever method is chosen, training for the managers and ratees is necessary.

As with upward assessments, once the assessment is completed, participants should be guided through their data — ideally, making their own interpretations of it so they have ownership of their conclusions. The consultant should be present to help correct misunderstandings, focus attention on action and interpretation rather than blame and diversion, and to then guide the conversation to action steps. These should be in some way observable or concrete and have definite milestones and deadline dates, which are followed through by the manager or supervisor.

The manager or supervisor’s role can vary. In general it is best of sharing of the actual numerical results is left to the person being “rated,” with the manager or supervisor receiving a brief summary from the consultant to aid in following through with action plans. The action plan itself should be shared with the manager or supervisor, who should take on the follow-through process, scheduling meetings over the upcoming months to review progress.
Recommendations

Most businesses would benefit from better communications and management. A good review system could help to improve communications, while aiding people to increase their own effectiveness and to clarify their own jobs and responsibilities. An innovative system could not only increase the performance of the staff, but also help them to work together, with common goals and fewer obstacles. It could help people to comment on others' performance and perceived problems more freely.

Even for a small business, one with a single owner or manager and three or more employees, 360 degree feedback, upward appraisals, and peer appraisals may be helpful. They can bring out things which are normally never spoken, reducing tension, improving communications, and most likely raising the employees' (or the manager's) performance considerably. However, to use the data and opportunity wisely, follow-through is essential; otherwise the results will eventually fade and gather dust.

Involve your employees in the process. If they design the new performance appraisal system, they may be more dedicated to it--and both you and your employees can reap the benefits.