Why Annual Performance Reviews Suck And How Gaming Can Fix Them

by Thomas MORADPOUR on February 19, 2011 · 25 comments

I’m not in Human Resources. But if I was, here’s one thing I’d change. Annual Performance Reviews.

You set goals at the start of the year, fill in a form of some kind, review results twelve months later, have a chat, a rating, and a pay rise. What a broken system…

WHAT’S WRONG WITH ANNUAL REVIEWS?

1. They happen once a year. Yes, it’s a tautology. But I really don’t know why annual is an appropriate frequency to manage performance, other than to keep HR clear to do other stuff eleven months in a year. It’s a horizon most people can’t wrap their heads around – it’s just too far away.

2. They are static. Why is it right to be doing in October what I said I’d be doing back in January? Annual reviews hardly take change in marketplace conditions into account, or new ideas, and become increasingly disconnected with real-time action as the year goes – not much space for agility.

3. They are scary . They happen rarely, with all sorts of official rituals, and they have a major influence on career and compensation. Managing your performance and development is designed to be intimidating… why is that?

4. They are boring . I want my work to make a difference. I want an adventure to inspire me to do my best, I want a mountain to climb. No such thing in APRs, it’s just paperwork and to do lists, move along…

5. They are sandbagged. Unless you’re a newborn, masochist or come from another planet, you’ll know that “under-promise and over-deliver” is the only winning strategy. Reviews are not designed to set big hairy ambitious goals.

6. They are linked to pay. OK, there has to be a fair mechanism to manage pay. But money is not what gets people to wake up every day, inspired to do amazing work – so why is the main mechanic to manage employee performance still driven by the needs of a compensation process?

7. They are individualistic. Set individually, poorly aligned in most cases, they don’t give enough incentives to work as teams. Worse yet, you’re not supposed to share your review with your peers and co-workers, which makes sure no-one really knows what your super-powers are, or how they can help you improve.

8. They are simultaneous. Sorry, but evaluating everybody at the same time is not how you can do a great job developing each person. It just isn’t.

9. They are manual. I live in a world where I can get 10 metrics on our online influence, set google alerts, and use my iPhone as a visual universal translator… why do I still have to type in all targets and results myself in a word document or web form?

10. They are bell-curved. Bell-curving means you get a better rating if you’re just good in an average team, than if you’re outstanding in an outstanding team. Talk about a counter-incentive system there!

Don’t you find it mind-blowing that such a weak, un-motivating system still exists?

HERE’S WHAT I WOULD DO INSTEAD.

I would learn from everything I love about gaming, and how RPGs put players in charge of their character’s growth path, working hard on missions of increased difficulty, choosing how to upgrade their competencies, collaborating with others in quest parties and guilds… even motivating them to do menial repetitive labor like grinding foes, mining or even fishing.

And I would turn Performance Reviews into the best game you’ve ever played – something you’d actually want to engage in, every day, to perform better, and grow.

I would make it Real-Time and Mission based. Forget annual, this system would be live and keep track of progress every day. Every project would be a like mission that deserves its own evaluation. Every success would count towards critical job experience points (CJEX), eventually triggering access to higher levels of pay and more complex job missions. Failure would not be permanently scaring, but rather would identify immediate areas of improvement and learnings.

I would make it about Learning and Flow. CJEX would build up a number of on-the-job-learning competencies. The higher you’d rise, the more challenging it would become to earn CJEX, but the difficulty would always be right for your level. Volunteer-based special projects would offer opportunities to take on challenges above and beyond every-day responsibilities. Employees would gain access to training credits, which they would allocate on the competencies that matter to them. Strong incentives would exist to promote beyond-the-job development – such as bonus pay for learning a new language, reading relevant business books, keeping up with your consumers on twitter and blogs, and sharing what you’ve learned.

I would make it Integrated. Performance management would be embedded in everyday business tools, such as email or instant messaging that allows you to send kudos points, or innovation stage-gate processes where employee contributions are identified and tracked. Sentiment analysis and online behavioral metrics would also help qualify everyone’s level of influence, collaboration and leadership style, and offer actionable feedback through a personal dashboard.

I would make it Social. Performance management would not be individual and secret, it would be part of a social network at the intersection of LinkedIn and Foursquare. Your current objectives would be posted on your profile, together with requests for help from colleagues. Collaboration would be a significant way to earn CJEX, and would be recognized by kudos points handed out by the peers you supported, rather than by your boss. Success would be recognized by unlocked trophies (like Foursquare), recognizing individual or team achievements, both in the short and long term. Your profile would also display your “special powers” (talents, skills, competencies) so team leaders can pick you for missions that could benefit from your expertise – rather than through heavier people planning processes.

I would make it Fun. Finally, I would design the system in a way that promotes work life balance, socialization and play, to create an inclusive and strong team culture!

Sorry, I’m not in Human Resources, so it’s unlikely to happen very soon.
But I’d still love to hear your thoughts, and make such a system happen someday!!

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  • http://zachcole.com Zach Cole

    I love this idea of making the performance reviews social. As a student who has yet to enter the full-time corporate work world, I cannot quite attest to the state of the current performance review, but based upon this article I think I would be much more motivated and aware of the parameters on which I am to be judged if they were laid out in a game format. I like the idea of virtual badges and social integration. The kudos from peers would be cool too. It’d also be very cool if people in your given network could “vote up” your objectives if they knew you were doing a particularly good job, or going above and beyond. Nice stuff, Tom!

    • Anonymous

      You’ll come to “enjoy” these soon enough Zach! But I’m sure your generation entering the work force will have a massive impact on how things are done, coming from a culture of real time communication, ubiquitous technology, and games. Why would you settle for such an old system?
      Cheers
      Tom

    • http://twitter.com/ddebow ddebow

      Zach – see my comments above. At Rypple.com we’ve built social software that does exactly what you suggest. Kudos from Peers. Badges for completing Goals. Social integration. Like for Goals. etc. Check it out!

  • http://twitter.com/Ken_Rosen Ken Rosen

    Tom,
    Taking something universally accepted (even if hated) and turning it upside down to make it better takes an open mind and a ton of optimism. Yes, it’s unlikely to happen soon. But an org taking your advice to heart will perform better. I hope some folks really try.

    Cheers, Ken
    Ken Rosen
    Performance Works
    http://www.PerTalks.com

    • Anonymous

      Me too! I wonder what kind of organization would have the balls to change something like that…
      Thanks Ken :-)
      Tom

  • Gabriella Orourke

    I know that many of the HR Directors I know, including Dave Moncur in Pepsico Canada, would agree with you. People often confuse HR as a function (what are the things we must do to survive and thrive) with HR management as an activity. The latter is each manager’s accountability. Same way they mistake Marketing as a function with something everyone should be doing all the time. Annual reviews and forms should be considered ‘bare minimum’, but there’s nothing stopping you as a leader putting interim and project-oriented reviews in place! Having just conducted performance review discussions with my own team, I can tell you there’s no reason not to aspire to the results-driven, purposeful measurement you propose. Regardless of the organisation’s bare minimum review processes, it is possible to have a motivating, career oriented discussion with each member of your team and then set goals that will allow them to continue progressing and learning to the companies mutual benefit! I love your thinking! Encourage your team to share their performance goals and then invite peer and client feedback. H R would love you to!

    • Anonymous

      Gaby, I agree with you, once again.

      Managers can step in where the HR process fails. I’m not sure though that it’s a great idea to let individual team leaders create their own culture of performance measurement, incentives and tracking – something to be said about treating all members of a company with the same rules and fairness.

      At the individual level, the manager-employee relationship is what keeps people on track, and aiming towards great business performance and personal development. Live feedback is the key. Getting lost in the heat of the moment is the enemy…one that too often wins today with higher demands and leaner teams.

      I believe in the power of a good system and technology to make things better. Great players will always be great players… but if they play the right games on the right field with the right rules, they can truly excel.

      Cheers
      Tom

  • http://www.employeeperformancesolutions.com/ Jamie

    Tom, I’m afraid everything you say about the annual review, which I liken to a once a year report card, is true. What’s more is that there’s too much information in them; everything but the kitchen sink. Often the important key information is left out. Most managers have a hard time bringing up behavior based areas for development and it might be the one thing I really need to be aware of. What good is the process when it might not touch on the thing that’s most important? What good is it anyway if it’s something my boss knew 6 months ago and is just telling me now, in writing and when it’s going to impact my pay. The whole process is too high stakes and a look back in the rear view mirror. Quite useless in fact yet most organizations have them and I try and give advice to make the most of the process.

    My best advice to employees everywhere (and we’re all employees) is to continually ask two questions of your trusted advisor network (Who says it’s only the boss who has valuable info? What about internal customers, colleauges, vendors and clients?).

    Ask:

    1. Tell me what I’m doing well and that I should continue with. That way I can do more of the same.
    2. Tell me one thing I could do that would help me be more effective.

    Notice how I asked about what I could do as opposed to what my weakness is. Why on earth would I want to know that and why would someone want to tell me (honestly)? I also asked about the one thing. Performance reviews are about the 15 things; TMI! When I’m asking for the feedback I’m mentally ready to hear the information, I can ask who I want, when and how often too. I’d rather not wait around for the annual review to find out what I need to be relibrating in terms of my performance.

    Here’s a blog article I wrote on asking for feedback. If we have to wait for HR to change the process we could be waiting a very long time!

    http://www.employeeperformancesolutions.com/managing-employee-performance-blog/bid/42289/Two-Important-Questions-to-Ask-During-Your-Performance-Review

    Another tool I love that creates that kind of social network feeling you mentioned is http://rypple.com/ an on-line feedback tool that helps me do my own mini 360′s. It’s also free to individual users. Cool company out of Toronto.

    • Anonymous

      What a thoughtful piece of feedback Jamie, thanks for that!
      I truly enjoy when someone shows up on the blog and makes a comment that is smarter than my original post :-)

      You are 100% right – the power of managing our development is in our own hands, and comes with the desire to seek and act on feedback. A broken HR process certainly does not and should not get in the way of doing this, on both sides of the fence.

      That said, I soooo wish the official process was better. It’s the one that goes on files and records after all.

      Cheers
      Tom

  • http://www.patrickprothe.com Patrick Prothe

    Make it fun, social, real-time and integrated are great thoughts. I like how you just blew open the proverbial elephant in the corporate world. And funny this post hit me just as I’m writing my team’s reviews and finished my own self-appraisal. I totally get the WHY from an HR perspective, but they really do suck up an enormous amount of time and cause a lot of stress for all involved. We do our best to make the process transparent and if we as managers have done our job right, there are no surprises when we deliver the review.

    Your framework could actually make the review relevant instead of the seldom-read file cabinet document it is.

    • Anonymous

      So am I, of course! ’tis the time of the year…
      Thanks for the feedback Patrick!
      Tom

  • http://twitter.com/seancadigan Sean Cadigan

    Great post. Especially agree about making it about learning and flow. Very hard to balance offering a work/life balance but also asking the employee step outside their ‘job’ to learn and share new things. In a company that is extremely busy the ‘beyond the job development’ becomes very hard to sell but critically important!

    • Anonymous

      +1 on that !
      Thanks for reading and commenting, Sean
      Tom

  • http://twitter.com/Karen5Lund Karen E. Lund

    My worst experience was on a job I held for two years. Year 1: “Performance reviews are not tied to compensation.” Year 2: “We do not have enough in the budget for raises, so we will not be doing performance reviews.” Uh. Huh.

    But I once managed to game my own review. It was, as such things go, a pretty decent organization for reviews. Employees had a hand in writing our own goals, and we did get quarterly reviews, although short. So I wrote one goal as “Improve efficiency to reduce time spent on [task I didn't enjoy doing] in order to allow more time for expanded participation in [task I wanted to do].” It got approved. I got verrry efficient and by the first quarterly review I was spending less on the first task (but still getting it done) and starting to do more of the second, which involved additional contact with our internal customers.

    • Anonymous

      Whoever said “don’t be good at something you don’t want to be doing”?
      Cheers Karen!
      Tom

  • Eric Wargo

    I like your idea but in all honesty my main motivators are the pay increase and for a while I worked with a boss who never said what he thought of your work so the year-end-review was all I ever got in terms of feedback.

    • Anonymous

      bad bad bad boss….
      Tom

  • http://www.facebook.com/profile.php?id=21001735 Leora Israel

    Great article! We live in a world where you feedback from peers instantly with social media, so why aren’t we seeing it more in the workplace? The old way corporations worked just doesn’t fit anymore.

  • http://twitter.com/ddebow ddebow

    Hey Tom – I’m the co-CEO of Rypple.

    Basically: we agree with EVERYTHING you just wrote. So much so that we’ve built a company to achieve *exactly* what you are asking for. Social. Real-time. Reputation building. Integrated into real work. Learning focused.

    And, we have customers replacing their traditional performance process with a much more social process – almost exactly as you described today. In most of our customers, we are brought in by executives and managers who are fed up with an antiquated, infrequent form-filling process that doesn’t really help get work done or motivate people.

    I’d love to share it with you.

    Please check it out http://www.rypple.com and feel free to send me a note ddebow at rypple dot com

  • http://twitter.com/smartel Sylvain Martel

    Hey Tom,

    thought you may enjoy this presentation (if you haven’t already looked at it) : http://www.slideshare.net/Rypple/work-better-play-together-on-enterprise-gamification

    Cheers
    SM

  • http://twitter.com/smartel Sylvain Martel

    Hey Tom,

    thought you may enjoy this presentation (if you haven’t already looked at it) : http://www.slideshare.net/Rypple/work-better-play-together-on-enterprise-gamification

    Cheers
    SM

  • Ab

    Take a look at ViewsOnYou.com ….does a number of things you mentioned in your post….

    Review yourself. Invite others to review you. See how you compare.  Gives you a great insight into who you really are, based on how others perceive you…..can be done any time, and you can see how your reviews change over time….using metrics that are designed to capture the key traits employers look for but avoiding “scoring”.

    Ab

  • http://milasblog.typepad.com Mila Araujo

    I totally agree with and love this post. Tom, you should check out @Rypple because they have managed to do something very similar to what you are envisioning here, and I have personally used Rypple as a part of my “Employee Development program” (vs Annual Review only approach) for my team for a couple of years now and its awesome. It also (additionally) allows the opportunity for the team to thank each other and recognize success in the public eye. (My employees love this too).
     
    Annual performance reviews that do not have support worked in throughout the year are completely archaic and if you want to move forward, you need to move with the world and evolve these methods to rewarding, constant development. Development needs to be the priority and the “review” should be daily , weekly or monthly depending on the person and what they need to achieve.  I realize that stating the review should be daily sounds extreme, however this is very achievable if you have the right mindset. Meaning you reflect on your day, your goals and where you are at every day. Never lose track of your objectives. The *individual* has to review him/herself daily. A manager or HR needs to work closely with the people in their charge to respond on a regular basis to opportunities for development, and seek feedback on at least a monthly basis of how things are going. This can not only give indicators for training required, etc, but can also give heads up when there is another problem in the team. Listen to the people out there working it every day. This is very difficult, however if an organization makes the connection to their people a priority, then the results and numbers will follow. How much money is lost on an employee who isnt doing things optimally? At the end of the day this effort and change in mindset is worth it, as someone who tries as much as possible to apply this in my team – I agree it is hard – it requires constant conscious commitment to get out there , but the annual reviews we have now are more of a “lets look at what we accomplished and dream big moving forward” rather than a lengthy, drawn out, and potentially uninteresting and inefficient exchange, where the only thing the person is waiting for is the salary negotiation. Your approach described above is forward thinking, and it’s what needs to happen. The concept seems foreign to many, but move in this direction, get with the times, and you will see how much more rewarding it is both for the employees and for your results.

    Putting an environment like this into play also encourages stronger teamwork, it increases the possibilities to maintain a positive work environment in general, and I have found, it attracts the right kind of talent to the organization: people who want feedback, who want to develop and who get that the better we are, the better the company is, and everyone is happy.

  • http://www.facebook.com/people/Debasish-Bosr/518812954 Debasish Bosr

    This is exactly what we’ve came up with – http://goachiev.com

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