Performance reviews are a common source of stress for both employees and managers. Employees often go into reviews unsure about how their performance will be assessed and whether they’ll receive positive or negative feedback. Managers feel pressure to provide effective coaching, sometimes on an entire year’s worth of work, while balancing the sensitive subjects of salaries and promotions.
Why are performance reviews so ineffective so often? A new study published by Columbia Business School examined how employees respond to different types of performance evaluations. The paper, How Temporal and Social Comparisons in Performance Evaluation Affect Fairness Perceptions, was authored by Joel Brockner, Jinseok S. Chun, and David De Cremer.Employees are more receptive to feedback when managers don't rate them against peers Click To Tweet
Typically, managers use either temporal or social comparisons to assess the performance of employees. Temporal comparisons measure an employee’s recent performance against his or her own past performance, while social comparisons measure that employee’s performance against the performance of their peers. Think of it as a “me vs. me” (temporal) approach compared to a “me vs. them” (social) model.
The researchers found employees tend to be more receptive to feedback when managers use temporal comparisons.
Types of Performance Ratings
Comparing an employee against his or her own performance history allows for a more personalized, individualized performance review. It shows the employee that the manager/company is invested in and recognizes their personal growth and development, noting areas where the employee has improved since past reviews.
The researchers discovered that, generally, employees perceive these types of evaluations as more fair and respectful — even when constructive criticism is involved.
Employees perceive evaluations against past work as more fair and respectful — even when constructive criticism is involved.
When social comparisons are used as a foundation for performance reviews, employees are less receptive to feedback. Simply assigning a rating or comparing numbers against peers’ numbers — without acknowledging growth, obstacles, and individual goals — tends to leave employees feeling undervalued and disrespected.Rating without acknowledging growth and obstacles leaves employees feeling undervalued Click To Tweet
According to author Joel Brockner from Columbia Business School, “In order to improve upon the fairness factor and thereby better ensure employees accept the feedback, managers must acknowledge the individual identities of their workers and their specific contributions to the organization over time.”
The shift away from traditional performance reviews is nothing new.
The Cost of Performance Reviews
A Corporate Executive Board survey found that about 95 percent of managers aren’t satisfied with their companies’ existing performance evaluation processes, while 90 percent of HR professionals doubt whether their organizations’ performance reviews provide accurate information.
This skepticism is echoed by employees. According to Gallup research, only 26 percent of employees strongly agree that the performance reviews they receive are accurate. And only 29 percent of employees strongly agree that their performance reviews are fair.
Based on that data, it shouldn’t come as a surprise that only 14 percent of employees strongly agree that performance reviews inspire them to improve. And only 2 in 10 employees say that their companies’ performance management processes motivate them to do outstanding work.
So, how can you create performance management that drives employee success?
The Rise of Modern Performance Management
There are a number of tools that can assist managers in providing personalized, real-time feedback and effective goal management—the type of ongoing coaching that helps employees grow while boosting productivity. Putting this information at managers’ and employees’ fingertips year-round will also make for more effective, temporal comparisons when it comes time for performance reviews.