Keyword: feedback

I just got forwarded an amazing thing: a perfect performance review.  Actually, if you’re a manager or, especially a manager of managers, you’ve probably seen more than one of these in your career.  The performance review with nothing but the highest possible scores, and not a word of anything that even remotely sounds like criticism.  These reviews are a crime, a lie, and, most importantly, a missed opportunity.

The Mythical Perfect Employee

This perfect review is a crime, because top people are your most valuable resource.  As I said in my post on Microsoft’s recent performance review changes, you should spend at least as much time and effort on nurturing and aiding your top employees as you do in cleaning out the bottom ones.

It has been said many times that top employees aren’t simply better, or twice as good as your average employee, but as much as ten times more productive.  They deeply understand the mission, handle things without constant supervision, take on new parts of the challenge without being asked (or prodded), and they get it done more efficiently and with better work quality.

If you are lucky enough to have these people, they deserve all the love and kindness, and all the help to grow, that you can afford.  Giving them a perfect review, especially to people who know they are good, is likely to get a “yeah, great, fine, whatever…” response.  That is a crime of missed opportunity.

Here you sit, with a clear star of an employee, they are doing great work, all that you can throw at them, and they want more.  You have your semi-annual review and they come into your office for their feedback, knowing they’ve done well.  Yes, of course, you need to tell them, in no uncertain terms, that they did great work.  You need to clearly say (out loud, to their face, and even if you both already know it) what they’ve done, how wonderfully they’ve done it, and how much you appreciate that hard work.  They, and you, really need to make sure this gets said and that they very much feel appreciated.  It’s simply never said enough, and can’t be said too much.

And then you need to say “but…”.  Yes, you really have to say the “but…”.  You need to point out a couple of areas where they need to work a little harder or somewhat differently.  Perfection is impossible, and everyone has something they can do better.  Perhaps they need to play better with the other children, perhaps they need to spend less time in the break room, perhaps they need to go home every now and then, for gosh sakes.  Whatever it is, you need to give these superstars some place to go.  Everyone needs a goal, everyone needs something to shoot for.  Give a superstar nowhere to go in your organization, they will go elsewhere to find it.  And that’s the last thing you want.

When I’ve told people this before, they tell me: “but I have to give Fred a perfect review, or I can’t get them the [raise, promotion, bonus] they truly deserve.”  Horse-hockey.  Your senior managers are almost certainly not idiots and they realize that everyone has somewhere to go.  They will in fact look down on you for giving this review with such lame feedback.  And if your system doesn’t allow people to get a [raise, promotion, bonus] without a flawless review, the system is broken, and you, as a member of the management team, have an obligation to work toward its repair.  Start by giving an obvious superstar meaningful review feedback and also that [raise, promotion, bonus].

The perfect performance review is a crime, a crime of missed opportunity.  Those who commit it deserve to be punished, or at least to have their perfect employee promoted above them…

Today, George W.  Bush, ended his press conference (after the surprise drop-in on Baghdad yesterday) by waxing on leadership:

I understand leadership.  Leadership requires determination, you gotta be determined to do something in order to be able to lead particularly in difficult circumstances.  You gotta have will, you gotta have desire to succeed, and you gotta have a plan.  And that’s what I’ve found in Iraq.

First, let me assure you that I’m not going to turn this blog into a political soapbox.  I’ll leave that for others (like my brother at BarkBarkWoofWoof).  However, I should reveal that I am virtually never impressed by the President.  So, when he speaks on one of my favorite topics, leadership, I feel compelled to comment.

Photo by Jason Reed / Reuters

And surprisingly, he’s got a lot of it right.  As I say time and again, a lot of leadership is knowing where you are going, making that direction really clear to everyone, sticking to that in the face of distraction, and pushing until you get things done.  And that’s what Bush is talking about here.  So, I guess he’s on target.

However, another big part of leadership is listening, and I’ve got to say it’s a part that Bush doesn’t seem to do very well.  Surely he listens well to those immediately around him, some of the buzz is that he’s merely a puppet at the control of his handlers.  But that’s not the real issue.  The area where he seems to have the most trouble is getting bad news.  It seems (albeit from a great distance) that he either doesn’t like to hear bad news, or his handlers keep it from him.  In either case, it seems that bad news just doesn’t get much of a hearing in the oval office.

To be fair, this is arguably the toughest part of leadership.  You have a vision and a direction, and something comes in unexpectedly to upset that plan.  It can be a very tough decision whether to modify your plan or to press on in the face of the adversity, hoping to push past the difficulty.  So Bush is neither alone in his challenge, nor to be faulted for his perseverence.  But at some point everyone needs to take stock, listen to all the input, and make the tough choice.  Key to this is good, quality, honest feedback straight from the people in the trenches.  I’m just not sure how much of that gets to the president, or how much he really hears.

And let’s not get me started on the “you gotta have a plan” part.  I’m pretty confident that the plan ended with “Mission Accomplished”, and we’ve been flying blind since then.  But that’s another topic, and one best left for others.

Microsoft just announced a number of changes in personnel policies designed to improve sagging morale.  Good for them.  It’s the result of a year of work by a longtime colleague of mine and now SVP of HR, Lisa Brummel.  According to the reports, she spent a year listening to people and came up with a range of changes designed to stem the tide of people leaving.

Most news reports have focused on things like putting towels back in the locker rooms and giving senior people more stock, which are all well and good.  But one point that was overlooked and seems intriguing is the changes they made to the scoring of performance reviews, a personal hot button of mine.

For decades Microsoft has done performance reviews with a rating system that was graded on a 10 point scale, from 0-5 on 0.5 point increments (in a rather silly attempt to avoid the look of a “beauty contest”).  The ratings generally went like this:

• 5.0 – You walked on water, then turned the water into a nice Merlot.  Almost impossible to reach, given to maybe one person a year, I saw perhaps 5 in my career there.  Used to mean you would get a surprise 1-1 visit from BillG in your office.
• 4.5 – Outstanding work, really above and beyond the call.  Used to mean something like 100 hour weeks, and with amazing results.  Hard to get more than one of these without a promotion.  Very small percentage of people: < 1%.
• 4.0 – Great work, excellent results, clearly leading the pack.  Something like 10-15% of the people would get this score.
• 3.5 – Solid work, well done, everything is fine.  Most people (e.g. 70+%) would get this score.
• 3.0 – You have a number of things to work on, some of them are threatening to your livelihood.  You must improve or you are at risk.  This was managed by HR to be about 10% of the team.  There was always pressure for managers to give someone a 3.0, although the 10% was never rock-solid.  But come on, SOMEONE on that team isn’t doing everything perfectly.  If you got a string of 3.0s you are in trouble.
• 2.5 – This is the first step before the exit.  If you get a 2.5 and don’t get fired, it means you got the message.  If you get a 2.5, you had better either have an exit plan, or be working your butt off to save your job.
• 2.0 – Security is waiting outside my door to take your badge and help you pack.
• 0 – 1.5 were unused.

This system worked fine for years (e.g. the last 25 years), but was always a source of complaints.  Some people didn’t like the subjective nature of reviews –- come on, performance reviews are subjective, that’s why you do them.  Some people didn’t like being rated like cuts of beef (oh, get over it, you’re rated every day by your salary, by your peers…).  But the biggest point of pain seemed to be the requirement for people to give a reasonable percentage of people a 3.0 or lower.

This can be seen as a Jack Welch’ian “toss out the bottom 10%” but in fact it just stemmed grade inflation.  And reasonably speaking the world is not Lake Woebegone where everyone is above average.  Some people in every group need to improve.  So Microsoft required groups of more than just a few to have something like 10% rated 3.0 or below.  This is just reasonable.

Now, in this new system they have gone away from numbers and gone to words.  As I understand it, there are now three categories: “Exceptional”, “Strong”, and “Needs Improvement”.  Seems to me that is the same as 4.0, 3.5, and 3.0 — but nobody asked me.

More importantly, however, this has made a good system worse.  Not at the bottom of the scale, where it simply replaced a number with a name — they still need to worry about grade inflation, and there will still be groups that get told “oh, come on, you have to have at least some ‘needs improvements’.”  No, my concern is where it should be: at the top.

Rewarding good performance is at least as important as correcting poor performance.  And now Microsoft has lumped all good performers together in a lump.  No longer will the true stars stand out from the really hard workers.  No longer will people who achieve “Exceptional” (aka “better than average”) have motivation to strive for more.

And why did they change this?  Because people at the bottom were offended.  Ouch.  Seems like a big mistake to me.  I’m a huge believer that the best performers aren’t just better than average, they are 10 times better than average.  You need to worry more about those people than anyone else.  This seems like a move in the wrong direction.

Set the time for reviews to be off-schedule from your main business processes, especially budgetting.  The last thing you want is for your team to be overwhelmed with non-line-of-business work, or to give either budgetting or reviews short shrift.  Neither your business, nor your employees will appreciate that.

For example, if you are on a calendar year schedule and you typically budget in the fall, do your big review right after the first of the year, with a “mini-review” in the summer. (See my FAQ on review frequency.) A typical schedule would be to set the reviews to be written and delivered in late January (due January 31), and then for the checkup review to be due by July 31st.

This approach lets you budget for the pay increases that will happen right after the first of the year.  You will also have light weight reviews in the middle of the cycle, in time for managers to give their best guess as to necessary pay increases for the next budget season.  See, there is a rhyme and reason to these things…

Immediately after an organization decides to do performance reviews, the first thing they ask is: how often should we do them?  There is very real tension between providing enough feedback to the employees, and making painful busy work for the management team.  Fortunately there is a good compromise that many people choose.

I recommend that you do performance reviews on a twice-a-year cycle that includes a comprehensive annual review with a mid-year “checkup” review.  This approach has several important advantages:

• Employees get feedback more than once a year, which is a real benefit.  Most managers simply never give enough feedback, and this kind of system forces it to happen.
• The burden on the team to go through the process is lessened by the lighter weight mid-year reviews.
• You can offer pay increases and other rewards more than once a year. (I firmly believe in tying pay changes to the performance review.)
• Practice makes perfect - if you only do reviews once a year, people get out of practice.  By doing them more frequently, managers get better at delivering both good and bad messages, and employees get used to getting feedback.

Reviews don’t have to be that hard.  If you would like to see examples of what I think performance reviews should look like, see the performance review whitepaper elsewhere on the site.