Performance Appraisals Are Management Malpractice: A Love Story. (Part 1)

It's time to stop pretending managers are unbiased and able to accurately assess performance.

I remember the first time I was exposed to story points. I loved them as a concept; finally, some way for me to measure my performance. Not having these deterministic measures caused me much anxiety. I was not working as hard as possible, but how would I know if I didn’t have a measure? It’s my moral and ethical responsibility to give 100% to my employer, right?

The story point bloom fell off the rose quickly for me, but a lasting lesson was left behind. We all want to do good work. In the US, we over-index our identities on our vocational achievements. If I can’t measure my performance empirically, I have to hope my “betters” can and will honestly constructively assess me so I can reach new heights. Indeed, everyone wants this; my performing better creates more profit for the company, so naturally, my many bosses would want the same thing.

Not so fast…

Measuring complex things such as quality, value, and productivity would be super valuable if our purpose was to maximize profits and minimize costs.

What I’ve seen in the ensuing years initially seemed unwilling to quantify what’s valuable and measure what it takes to achieve that.

What do we measure to be good bosses when we can’t or won’t measure value? That’s right, effort! We loooove to try and measure effort. I’ve had executives tell me, “Let’s just assume everything to be worked on is of extremely high value because it is.” Any effort to define outcomes or throughput correlating with corporate goals can result in a lack of enthusiasm and outright hostility.

Not only this, but people want to compare workers against each other. Of course, without any empirical measures, this means observing them and making a decision based on social observations of their value.

What’s the problem

Okay, storytime:

I was once on a leadership team in an organization that had been pressured by a member of the board of directors to institute a performance ranking system wherein performance and annual bonuses would be adjusted based on “performance.” These bonuses mattered greatly to employees as these bonuses could be well into the mid-5-figure territory.

So, what was the prescribed mechanism?

Firstly, no effort was made to define a rubric of any kind. We will be subjectively measuring people based on their social standing. I know I’m supposed to pretend we’re skilled professional leaders of people and know how to do this innately, somehow, but that’s not why I’m here. If there’s no objective measure, we’re picking favorites.

The system constraints at the time were as follows:

• If you want to give an outsized bonus, you must choose an employee from whom to take it. Giving flat bonuses across the team would be considered a failure of the manager and strongly discouraged. Someone must be better, and someone must be worse. The VP about which I wrote in the “Unfair, Unprofessional, and about someone a lot of us on here <LinkedIn> know” series pejoratively referred to evenly distributing bonuses as “peanut buttering” because we all know, choosing our favorite white male bros to give big bonuses is much “fairer.”

• If everyone overperformed, you must make the case that you’re not “peanut buttering” the bonus funds. If you wanted to give people outsized bonuses for performance, but nobody else deserves a reduced bonus, no additional budget would be allocated for an equitable performance-based bonus. Furthermore, you are absolutely required to choose someone to take a bonus away from if you want to give an outsized one to a “top performer.” it was evident that not choosing “losers” would be socially frowned upon by senior leadership.

How is a conscientious manager to remove their bias from this system? Luckily, a lot of managers didn’t suffer from conscientiousness. I’d say most knew this was a broken system but also knew how to keep their jobs. A smaller group loved the idea because they finally had a stick and carrot to control their teams. And an even smaller group (maybe a group of one) worried about how they would be fair to their culturally diverse employees.

“Performance Calibration”

I’m not going to name anyone here, but I can say this leadership team has since been scattered to the winds by all the forces in the enterprise that ensure maximum executive turnover.

The process of “calibration” is as Kafkaesque as the title.

Everyone with status down to the principal engineers gathers in a large conference room, sworn to silence. Because nothing says “trust,” like “Never tell anyone what we said about them in this secret meeting about their value as people, er, I mean employees. “

So that’s VP>Sr. Director> Directors> Sr Managers> Managers> > Princ. Dev.

Then, we create a 3x3 grid on the whiteboard and write the names of people onto sticky notes.

We label the x-axis with “performance” and the y-axis as “potential.” We have zero measures for performance, and “potential” is just a Kafkaesque nightmare.

We proceed with the guidance of our HR ‘partner’ and arbitrarily stick the names of people onto the grid where we subjectively believe they belong.

Then begins an experience wherein everyone gets to describe the person and why they were put in the box they were in.

Our HR partner’s contributions consisted almost entirely of putting their thumb on the scale. Examples are:

”If that person is borderline, why don't we move them down?”
”Are you sure they’re high/high?”
”Why would we promote them? They just got promoted last year?”

I asked, “What if we take borderline people and push them up into the higher category instead?” no response, angry dagger eyes from the HR Lizard.

When my turn came, I put my underutilized coach into the high/high category.

One director said, “I feel heartburn over this high/high. This person did a workshop with me and my team, and when I asked them when they’d be implementing the changes, they told me they’d be happy to help me do it. That doesn’t seem very good to me.”

To which I said, “Well, that’s kind of how a coach works. Bill Belichick doesn’t run out and throw a few passes during the game.” They trained your people and offered to help you implement the approaches they taught you.”

HR Lizard: So how are they high/high if that director has a problem?

Me: That director’s problem doesn’t reflect this person’s performance and certainly not their potential. This person lacks sufficient demand for their coaching services, but despite that being their role, they’ve handled all the busywork they’ve been given very effectively and with a smile. Lack of demand is my responsibility, not theirs. I haven’t created an environment wherein they can achieve their very high potential.

HR: Why is that your responsibility and not theirs?

Me: Because I am responsible for any environmental impediments to their performance, I see no reason they should be penalized for my shortfall.

I was not HR’s favorite people leader.

One great leader in the room withheld a person's name and opened up a discussion, stating they wanted feedback about this person from the group before giving their perspective.

Multiple people said this person seemed frenetic and chaotic. They seemed not to be simplifying things sufficiently. They talk a lot, so they must not be an attentive listener.

One person even said, “They just used pre-existing documentation to learn and share the details of the project with people!” as though this program manager’s job is only ever to invent things from scratch.

At that point, this manager revealed that they had two letters from leaders in other organizations strenuously recommending this person be promoted. Suddenly, everyone clammed up, “Well, I haven’t worked directly with them much this year, so…”.

Yet that person who had positional authority felt okay, giving their negative impression of this subordinate individual contributor.

Someone I can say without reservation was doing great work.

If there’s no data, then we’re just guessing. If we’re guessing without data, we’re injecting bias.

Ultimately, this was abuse by committee.

The theory here was that other leaders would suppress bias, but I saw none of that happen. You could argue the manager who withheld their perspective until people spoke about their report did something to manage bias. Still, I think he only really managed to protect his team members from the stochastic repudiations of the other leaders. For that, he deserves high praise.

The only consistent pushback I saw was from other leaders and HR trying to push down ratings.

At a subsequent calibration, the brand-new VP wanted to influence the bonuses of these people he’d never met. So, he confidently asked a manager who was saying nice things about one of her reports, and the following exchange ensued.

VP: Sure, but what code did they put in production last year?
Mgr: I’m sorry, what do you mean?
VP: I want to see what code they pushed to production last year before we decide.
Mgr: Code pushed to production wasn’t a target goal last year. It wasn’t communicated to anyone that they’d be assessed on their code volume to production.
VP: Yeah, well, I’m here to raise the bar, so I’m raising it.
Me: You’re welcome to set new targets and define a rubric for this year’s performance, in fact, I think it’d be helpful, but you can’t move the goalposts on performance already delivered last year.
HR (actually a lovely person for a change): Yeah, he’s right (VP). You can’t change the goals for last year in calibration.

This VP didn’t adore me even though I seldom spoke my mind. Oh, and I was asked by the SVP who appointed this VP (yes, appointed) to be candid and help his friend with strategic leadership since he has no executive experience.

His predecessor asked me in my interview an interesting final question.

”What makes you angry enough to lose your temper professionally?”

My response was, “Abuse of positional power.”

He seemed to like that response; he hired me, after all. Sadly, on my first day, I was told I’d be helping administer the new stack-ranking performance bonus system.

So much for an “inverted pyramid” and supportive “servant leaders.”

In Part Two, we’ll cover some of the other perils of this system and more stories.