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Here we come again - annual preformance review (Part 1)

The annual performance review is an exercise that (let’s face the fact) many employees don’t like. People actually dislike them so much that some research shows employees compare them with a visit to a dentist (painful).

Why is the perception of annual performance review so negative? I believe there is a couple of reasons for that.

1.Rating bias

It appears that employees view yearly appraisal as a non-objective task. Managers tend to include non-performance factors, which might include gender, race, marital status, etc., in their ratings. This might be taken as unjustified unfairness. This process can further impact employees’ job satisfaction and turnover.

According to undisputable research, we tend to like people who are similar to us. That obviously can have an impact on how employees are rated by their managers also.

An interesting factor that can have a big impact on how the manager rates an employee is their… ‘MOOD’. It appears that when a supervisor is in a more negative mood they focus more on mistakes and problems. Managers who conduct a performance review of their employees in a good mood usually overlook an employee’s poor (whether real or perceived) performance.

2. Poor informal feedback

I am sure you agree that we all like to know where we stand with others. Frequent quality feedback is the gold standard of a true leader. It builds trust and establishes transparency. According to surveys, most employees believe many managers have an issue with communication skills and delivering quality feedback (I carefully stress ‘quality feedback’, not to be mistaken for ‘incessant criticism’). Employees seek authentic and honest feedback and not a sandwich approach where a manager is trying to hide the negative between some compliments.

3. Hypocrisy

There is a list of policies and standards to be followed by managers when issuing feedback however some managers do not follow these guidelines. This visible contradiction creates distrust, disappointment and criticism among employees. It also reduces employees motivation and has a huge impact on companies’ morale.

The biggest problems arise when managers use ratings to manipulate the performance of their subordinates to compete with each other. They might use the appraisal tool to support the employees they like more (in-group) and punish those they don’t like (out-group).

4. Poor communication during the formal feedback session

Many managers have a lack of training when it comes to giving constructive, unbiased and quality feedback. They are also very busy over operational tasks which do not allow them to gather sufficient information prior to formal appraisals. As a result, employees might fall victim to the ‘report card’ syndrome. It happens when a manager gathers many examples of employee poor performance and surprises them with a poor rating as a result. This situation frustrates an employee and creates a perception of unfairness which then has a motivation for grievances and potential lawsuits.

5. Rater errors

That situation usually occurs when the ratings are too high or too low. The underlying issues on the manager’s side could be the inability to deal with a conflict or setting impossible performance standards.

6. The mismatch between self- and rater appraisal

There is a big chance that before a manager conducts an employee appraisal, they have already rated the employee’s performance in their mind. In this case, the appraisal process becomes a necessary evil ceremony that he/she (the manager) has to perform just to appear as being fair, without actually being fair, to the employee in question. The most damaging rating system is grading on a ‘curve system’ and forced distribution system as it forces the managers to rate their subordinates below the average. An employee who faces a big difference in their ratings usually discount or dismiss the feedback provided and its source (i.e. their supervisor). Evidence shows that many employees become demoralized and withdraw when this happens.

In the conclusion of this blog post, a fair assessment of employee performance can have a direct impact on future relationships and further performance of the employee, therefore, it is crucial that the appraisal is being done in a fair and unbiased manner.

In the next blog post, I will provide a detailed explanation on how you, as a manager, can prepare for performance reviews in order to increase the satisfaction from the process and make it a resounding success for both the employee, the manager and the company as a whole.

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