'The self-review is one of the worst ideas in performance management'

There’s absolutely no reason why a company needs to conduct annual reviews. The annual review exists largely to serve the need of the compensation department. Conducting shorter reviews more frequently allows a better opportunity for course correction. It’s also less of a burden on both the manager and the employee.

My clients are large global companies in the financial services, consumer products and technology industries and I find very similar challenges in this area, such as:

* Poor goal setting: In many companies it’s not clear exactly what a performance appraisal is appraising. Is it my manager’s perception of my year in general? What tangible output I produced? A performance appraisal is valuable only if it assesses an employee against a few very clear goals. My experience shows that most companies do not have a crisp process for setting goals. It’s easy to understand why employees dislike appraisals if they don’t understand what they’re being appraised against.

* Not enough differentiation based on the results: Even in countries like India, where large salary increases have been the recent norm, there’s still too little compensation differentiation between top and bottom performers. The appraisal process will seem hollow if I’m a high performer but my salary increase is only a few thousand rupees larger than what’s received by the slacker who sits next to me.

* Bureaucratic forms and process: Busy managers and employees get annoyed when they have to spend an hour or more wading through a bureaucratic HR process. There’s absolutely no reason that the goal setting and appraisal process can’t be done on one sheet of paper (or one computer screen).

The self-review is one of the worst ideas in performance management. Companies ask employees to conduct a thorough self-assessment and employees diligently spend hours writing a narrative that they hope will get them a better rating. What companies don’t tell their employees is that, in many cases, their manager had to submit the ratings before the conversation took place.

The employee thinks that they are participating in a negotiation; the manager knows that they’re not. Self reviews are a bad idea because each of us overestimate our performance. This sets up a challenging dynamic at performance review time when, no matter how positive my boss is about my performance, I’m always going to feel that I actually performed a bit better.

The review is an opportunity for a manager to gather data and tell the employee how they did during the year. That doesn’t mean there shouldn’t be a great conversation at review time, but employees should understand that their role is not to argue their case. I tell my client that they should "give them (employees) a voice, not a vote" in the review process. Making the self-review voluntary would save millions of hours of time that could be better spent in working.

Marc Effron
President, The Talent Strategy Group & author of One Page Talent Management