In this episode I discuss why performance reviews do not work and why employers are to blame. Changing the name doesn't change the game! We confront the rising trend of replacing 'performance reviews' with softer terms like 'feedback' and 'feed forward.' Drawing on my own experiences as an employment attorney, we discuss the distinct lack of effective training for managers and the resulting damage to employee engagement and trust. We wrap up by emphasizing the crucial need for employers to view employees as valuable entities rather than mere 'human capital.' Join us on this enlightening journey and equip yourself with the knowledge to navigate these challenging workplace dynamics.
Links to Source Material:
https://www.nber.org/papers/w31762 Why Women Won
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It's Mark and welcome to the next edition of the Employee Survival Guide. Today's topic, the episode is Performance Reviews Don't Work. Employers are to blame. The dreaded performance review has been canceled, but maybe not really. Companies, large and small, have been moving away from using performance reviews to measure performance for some time. Nearly half of 49% of companies give annual or semiannual reviews, and only one in four companies in North America said their performance management systems were effective. According to a survey of 837 companies, employers use terms like feedback and feed forward in place of performance reviews. Are you confused? You should be. Employers are the problem. Performance management and performance reviews falls under a term I coined and I did trademark this employee nomics. The term covers literally every aspect of the dysfunctional work relationship between corporate management employees, including the unlawful use of performance reviews to act as cover for employment discrimination and termination of otherwise qualified and successful employees. The term also helps explain why employers or employees never get a benefit from entering into non-compete agreements because there isn't one. Another term helps explain why employers push employees into forced arbitration agreements to hide their discriminatory and previously distorted sexual harassment cases, which is now illegal. The term helps explain why there is a huge wage inequality between genders because employers just believe men should be paid more, and for more robust discussion on wage inequality, I highly suggest reading the Nobel Prize-winning report why Women Won by Claudia Golden to just won the prize recently. The list of situations covered by the term employee nomics is endless, but at least now we have a word to describe selfish employer behavior designed solely to maximize profit and dehumanize employees. As an employment attorney, I advise executives and employees at all levels and I provide employers with my version of the performance review, where I specifically identify unlawful and illegal actions imposed on our clients. We use lengthy, sworn client affidavits, extensive notice of claims letters and even federal lawsuits to shame employers, because shame is king. Employers do not like it when we review them because we speak with the truth that employers refuse to acknowledge. This is not even to the SEC, the Securities Exchange Commission. Who else is going to review employers and evoke meaningful change Last door? Or the USC Ecompliment Opportunity Commission? Give me a break. Employees are on their own and employers love to manipulate the current dysfunctional relationship to their twisted advantage and at an extreme economic cost to employees. But not on my watch. Performance reviews were an N-R, an integral part of the dysfunction forced on employees. The act of conducting a performance review produces anxiety and dread among employees. A recent Wall Street Journal article on September 12, 2023 titled Bosses Say Feedback is Too Scary for Some Workers, so they used this word instead, and it examined the word feedback given to employees was too scary for some employees because of the anxiety-inducing word. The article fell flat for me because feedback is just another word for performance review, developed by expensive management consultants attempting to engage in semantics to get employees to conform under management's constant control. Likewise, 95% of all managers hate giving annual performance reviews because they are time consuming and offer little evidence. The review will provoke the type of reaction it was intended to have, ie better performance and more profitability. Adding insult to injury, managers lack the appropriate training to provide an effective performance review and probably cannot communicate effectively to promote change in any employee. In case you didn't know this fact, companies do not train managers to manage or provide effective performance reviews. Managers train themselves on the job. It's a fact. Another contributing factor in the continued use of performance reviews is that it is big business for software companies. Software companies such as SAP, success Factors and Workday HCM cost employers annually 15,000 to 60,000 per year per license to use the software. Phrases and words like performance review and feedback, and even performance improvement plans, are all relics of an older employer regime that has lost connection with employees, who, ironically, make them profitable. Disengaged employees already know performance reviews are a joke and have little bearing on their jobs. Currently, most employees have figured out that performance reviews are used to set up employees for termination. Finally, some really ill-minded managers use performance reviews to further the discriminatory biases against a wide variety of protected classifications. Employees are the solution. The most ridiculous aspect of regarding problems associated with the use of performance reviews is that employers never include employees in the development of an effective performance management system. Employers may claim they do, but don't believe it. The situation is so cute right now that employee engagement is at an all-time low. Performance reviews and employee engagement are one and the same. According to a recent Gallup poll, us employee engagement needs a rebound in 2023. According to Gallup, the engagement elements that declined the most from the pre-pandemic record high engagement in 2019 and 2022 were the following, and they sound like a performance review Clarity of expectations Well, of course. Connection to the mission or purpose of the company. Opportunities to learn and grow. Opportunities to do what employees do best. And my favorite one at the bottom feeling cared about at work. Employees need to feel they are part of the conversation instead of being dictated by the authoritarian systems called quote unquote employers. The word trust or feeling cared about at work is a simple word with a common understanding to millions of employees, but unfamiliar to employers. Employee engagement and performance will dramatically increase once employees feel they can trust employers. How simple is that? However, today, employers continue to perpetuate the at will employment management system, resulting in employees not knowing what hour or day of the week they will be fired. Trust and feeling that you are part of a family instead of a team will go a long way to reducing performance issues and growing employee engagement. You cannot get the other items on the Gallup list above unless you provide a working environment where employees feel more secure. I know you needed somebody to say that to you, but I'm saying it. Employers spend millions of dollars on expensive consultants, yet miss the mark completely. Employers are afraid of giving employees control over their jobs. I am not talking about unionization. I am talking about giving employees a voice and the ability to work in an environment where they matter and can connect to the mission of the employer. Employees matter. More importantly, employees, today more than ever, need to know they are participating in something for the common good, I think social issues and environment, also known as ESG, which is the environmental social governance movement that's happening. When employees begin to recognize employees as valuable individuals instead of human capital on a spreadsheet, and develop a trust, trusting working relationship, performance and employee engagement will flourish. That's been demonstrated. As always, my concern is about where employees' management and subordinates are headed and whether the employees have the right information to make rational decisions beyond what their employers are willing to provide. I have no filter because I don't have a manager. I believe it is my responsibility to fill the vacuous void where no other employment attorney wants to tread for fear of being canceled. Yes, I do negatively criticize employee-focused topics like performance reviews, because no one else will. As I oftentimes editorialize after my podcast episodes, I think the episode tells you exactly where we're at. Employees are really the solution. Employers are just not ready to give them a voice, to include them in their work, in the conversation. It's just purely dysfunctional. Until that changes and until employers want to find more profitability in their companies, they're just going to do the same old, same old. Just use this information to your benefit as you go through your job and dealing with performance reviews. You now know some more information to maybe make you dangerous. That's the point of this podcast. Until next time, thank you.