Performance reviews are seldom something that employees look forward to. Despite their bad reputation, they can provide some invaluable feedback however. Indeed, an analysis of them back in 2016 found that performance reviews do in fact provide valuable information to managers.
Despite the potential upside, they also run the risk of consuming large quantities of employee time for little reward. So being able to ensure that performance reviews deliver benefits to both parties can be a real boon to corporate productivity. That’s exactly what researchers from Columbia Business School believe they can do.
A recent study from the school finds that when reviews are conducted such that the employee is evaluated against their past performance rather than against the performance of their peers, the reviews are seen as fairer, which in turn improves both productivity and morale.
“Our findings show that, simply put, the process matters,” the researchers say. “Oftentimes, the performance review process can be viewed as uncomfortable, unfair and uninspiring. 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 ideal performance review
The most common form of performance appraisals compare our current performance levels either with our previous performance levels or the performance levels of our peers. When the two approaches were compared, the researchers found that comparing our performance now with our performances in the past were more effective because employees regarded them as fairer, especially on an interpersonal level.
Respondents also regarded such reviews as more individualized, and this was valuable in signalling to the employee that they were important to their employer, and indeed to their manager. This opens them up to both positive and negative feedback during the review.
When we’re compared against our peers however, the results are less positive. These social comparisons often lack any of the specific details we need to improve our performance, whilst they can also create an impression of being just another number in the workplace. This made employees less open to feedback, regardless of whether it was positive or negative.
The findings suggest that the best way to approach reviews is to ensure that there are at least some elements whereby the employee is compared against their past selves. This can also extend outside of the appraisal environment, with managers encouraged to treat employees as individuals.
When and when not to be social
By comparing performance against yourself, you can also make appraisals less subjective. A study published in 2016 highlighted the negative impact subjective reviews can have on employees. It found that when employees felt under-rewarded, their productivity dropped significantly, but the opposite didn’t appear to be the case when they were unfairly over-rewarded.
This sense of fairness and injustice can be hugely powerful therefore. What’s more, it can be especially important when things such as salary, bonuses and promotions are wrapped up in your performance appraisal. Indeed, the evidence suggests that if you are going to make appraisals social, then it should be in how these bonuses are distributed.
A study from 2013 found that when employees were given so called ‘pro social’ bonuses, ie bonuses that they have to award to a colleague, their own performance rises in turn. The study found that when a $10 bonus was given to a salesman to spend on himself, he only generated $3 in extra sales, so a $7 loss. When the salesman was given a $10 bonus to give to a colleague however, the pro social bonus yielded an extra $52 in increased sales.
So there are benefits of being social when it comes to performance appraisals, but it may well be in how bonuses and rewards are distributed rather than how performances are measured.