How Does Your Company Compete in the Performance Review Game?

Last updated on December 14th, 2021 at 8:25 am by Chris Miller

It’s the time of year many companies review lessons learned from the previous year to revise and launch their performance management process.  You may look for feedback from your front line HR representatives, from managers creating reviews and providing feedback to their employees, from the employee themselves, and from your executive leadership team.

A few questions Talent Management teams often ask themselves during the preparation period for the annual review might be:

  1. When will we launch our performance reviews?
  2. When do we need to have them 100% complete so that we can pay compensation increases?
  3. Do we need to update/or redesign the look of the form?
  4. Should our rating scale change?
  5. Are our competencies still relevant?
  6. Is the instruction text as clear as it can be?

The list could include many more items depending on the perceived success or failure of your performance process.

In fact, we often spend so much time trying to ensure our process and form is administratively correct and efficient that we often lose sight of the large elephant in the room – what are employees and managers thinking when they are completing their review?  The purpose of this blog is to explore how employees and managers approach the performance review process, and what that means for you.

As an employee, completing the self-evaluation often instills fear as they try to play the performance management game.  They are trying to figure out exactly what they should include in their review to derive the highest compensation increase.

Do you suspect your employees are saying the following things to themselves as they complete their reviews?

  • I will “inflate” my ratings because more than likely my manager will agree with me and I am not about to document my weaknesses.  I will focus on what I am good at.
  • My manager already knows what merit percentage they want to give me so why I do I have to complete this review.

How about your managers? Are they saying any of the following things?

  • I have such a small budget to divide amongst my team.  With very little differentiation in merit increases between my poor performers and stellar performers, is there really a need for me to complete the review process?
  • How do I need to fill out the individual pieces of the review so that the end score calculates out to where I want it to be?  This way I can pay them the increase I feel is accurate.

These are examples of people playing the performance game: instead of viewing the form as a way to document discussions about performance, they’re figuring out how to fill it in to maximize its economic value (employee) or minimize how long it takes (manager).

So if we know that our employees and managers are playing the performance game to come to a compensation decision, what tools help you ensure your performance management culture functions the way you want it to? Use the Performance Management Playbook concepts below to better align performance reviews with what your organization wants them to achieve.

Performance Management Playbook concepts:

1)      Why are we asking our employees and managers to complete the performance review?

Understanding why you are doing something sets you on the right path to determine what and how you complete the process.    It also allows you to communicate and be transparent so everyone understands what the end game is and what is in it for them.  Human nature tells us that if you have a good reason to do something, you are far more likely to participate and be engaged than if you do not.  Regardless of the reason, you need to be sure that your performance review form, communication and process supports the mission.

  1. Is our sole purpose to pay compensation increases? Be honest. If the real goal of performance reviews is to allocate available dollars (merit, bonus, or base pay) across employees, people know it already.
  2. Are you looking to develop and cultivate your people? Be honest (again!). This is a much harder task than allocating compensation. If you want this to be the goal, then put processes in place that drive reinforcement on more than an annual basis.

2)      What does your rating scale say about your process?

Consider using a rating scale that does not have numerical values. Using labels instead of numbers (Meets Expectations, Exceptional, Superstar, etc.) forces both employee and manager to focus on attributes over a mathematical equation. If you shift the focus to behaviors, the quality of the performance conversation can increase.  In addition, you leave less up to one manager’s interpretation of what constitutes a performance rating of “three” versus the next manager.  Behavior indicators force a detailed discussion of actions so employees can model those behaviors.

3)      Do you need an overall rating on the performance review?

If you focus on rating labels and behavioral indicators as noted above, why do you need to display an overall score to your employee and manager? There are systems that will allow you to calculate a score in the back end so that it can be available for compensation and merit guidelines but it doesn’t have to be a prevalent part of the performance review. Performance is far more about the individual pieces that make up who you are in the job and your personal competence than it is about a single score to tell the whole story.  Removing the rating makes it much tougher for the employee and the manager to contrive a score for the sake of a score and shift attention to what you are asking them to review, document, and discuss.

Everyone likes the thrill and the rush of playing a game with the hope of winning. Understanding your end users and creating effective strategies to allow the company and your employees to win the performance management game is more than half the battle.  Creating and cultivating a performance culture that supports performance dialogues and conversations vs reviewing to an end number will help take you one more step forward to knocking it out of the ballpark.

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