Research highlighted by the Wall Street Journal shows something surprising: not only can performance reviews cause a bit of anxiety for employees, but this stress can actually be harmful. 

The Findings

The Wall Street Journal is bringing to attention the findings of a paper in Strategy + Business written by a team of researchers from the Neuroleadership Institute. The paper says assigning employees a rating, in the traditional sense, led them to experience a fight or flight feeling, similar to what happens in the brain when a person experiences a dangerous situation or physical threat.

The researchers wrote the following: “The employee may not say anything overtly, but he or she feels disregarded and undermined—and thus intensely inclined to ignore feedback, push back against stretch goals, and reject the example of positive role models.”

Researchers also reported their findings showed typical employee reviews tended to evoke the idea that job performance is based on innate skills and characteristics, leaving little, if any, opportunity for improvement.

Data from the study continued to show 90 percent of workers who were unhappy with their rating said they were surprised because they expected it to be higher. When an employee wasn’t happy with their performance review, it led to a 23 percent drop in engagement levels.

In 2014 research by a team of psychologists from Kansas State University, Eastern Kentucky University, and Texas A&M University showed how employees respond to negative feedback received via performance review.

The findings challenged the traditional thinking that motivated employees would respond favorably to critical feedback. It found that the best employees, those individuals who really did want to improve and grow in their careers, were discouraged by negative feedback.

In his writings, Stanford University Professor Bob Sutton says that performance rankings can lead to detrimental internal competition, which can not only discourage employees but also damage the possibility of a culture of knowledge sharing and collaboration.

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Redefining the Performance Review

The Wall Street Journal points out the fact that while many companies are sticking with traditional review methodologies, a few are leading the way to change this framework, including Microsoft and Cigna.

Microsoft, at one point, utilized a system with a ranking scale, and most employees were receiving ratings somewhere in the middle of that range. It was causing angst among employees who weren’t satisfied with mediocrity.

Now, Microsoft holds frequent, scheduled conversations between managers and employees. These conversations are not just about the past impact the employee has had within Microsoft, but they also focus on what can happen in the future to lead to improved performance.

In a piece from The New Yorker published this summer, Adobe was featured. Adobe is a company that did away with the traditional performance review in 2012, saying they were essentially useless.

Under the old system at Adobe, managers didn’t look at an entire year’s worth of accomplishments but instead only relied on recent achievements or issues to create reviews. These reviews were very much focused on the past rather than how employees could most successfully move forward toward a stronger future.

Now, under the leadership of Donna Morris, Adobe has moved to an informal system in which check-ins take place throughout the year, and employees receive feedback in a real-time way on whatever it is they may be working on at the moment.

The New Yorker also brings to the spotlight Deloitte, an accounting firm that once relied on a very comprehensive and detailed review process. Their original reviews included consensus meetings, where groups would gather to compare employees to each other.

Now, Deloitte has replaced this system with a simpler process in which managers are given a set of statements and asked to determine how much they agree with these declarations about a particular employee, using a five-point scale. A Deloitte representative said the goal of the overhaul was to change the paradigm from asking what managers think of each employee to what they would do with each employee, creating a more actionable system.

Redefining How You Review Performance

The goal of any performance review should be constructive criticism, with the emphasis being “constructive.” There needs to be an inherent sense of usefulness built into performance reviews.

So how do employers manage to give employees necessary and vital feedback on how they’re doing without destroying morale and fostering a sense of resentment?

The first tip is to follow the example of some of the companies above and check in with employees frequently rather than doing it once a year. When you’re regularly having managers check in with employees, you’re able to get a more robust view of their quality of work and provide more detailed feedback, and employees are likely to feel as if reviews are more fair and accurate in gauging them.

De-formalizing the review process may also be advantageous. When you’re relying on a formalized process of evaluating employees, there’s not a lot of room for thinking outside of the box, and everything becomes about a sense of internal competition and comparison. Instead, structure your reviews around the idea of a conversation, and encourage two-way dialogue between managers and employees.

It’s also vital to remove at least some of the stress from reviews so that employees aren’t experiencing that fight or flight syndrome cited at the start of this post.

One of the best ways to make it less stressful goes back to our first tip. . . giving employees feedback more frequently will take away the concept that it’s an all-or-nothing experience that could ultimately derail their career success.

Another way to make it less stressful is to train managers on how to appropriately provide feedback. Train them on topics including biases – for example, in many organizations; it’s been found women and racial minorities may experience harsher reviews than their fellow employees. Training your managers to review employees without biases will help employees feel as if the experience is fairer and less personally driven.

Finally, don’t create the feeling that performance reviews are one-sided and employees are helpless in the process. Let employees express their thoughts and feelings during the review process, and share why they do or do not agree with assessments being made about their work.

Does your company use traditional performance reviews, or have you moved to a newer model? How does your organization handle performance management in general?

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