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Professor Channels W. Edwards Deming and Writes "Get Rid of the Annual Review"
October 23, 2008

Get Rid of the Performance Review! - WSJ.com ($$)

(Same Column -- Site that's probably infringing the WSJ copyright)

A UCLA professor, Samuel A. Culbert, has written a monumental commentary in the Wall Street Journal. The subheadline says it all succinctly:

It destroys morale, kills teamwork and hurts the bottom line. And that's just for starters.

Dr. Deming always wrote that the annual performance review was harmful. In this article, he is quoted as writing the following:

Appraisals and merit reviews prevent workers from having pride of workmanship. We suppose that the use of the annual merit review gets the best from workers. As Dr. Deming says, "The result is precisely the opposite. You get the worst out of people. You don't get what you pay for."

Appraisals create fear, reduce cooperation between workers (and managers), and focus on visible results only. Frequently managers use appraisals as a salary administration tool. They use them to reward and punish. Appraisals are subjective. They commonly do not reflect the actual performance or potential of the appraised person. Appraisals are a lie.

Deming used to say "substitute leadership." Professor Culbert (my new hero) lays out some alternative approaches, but not before thoroughly trashing the practice of the annual review. Be sure to read the actual article (twice, even), but here are some highlights. Culbert actually calls the annual review "immoral":

I believe it's immoral to maintain the facade that annual pay and performance reviews lead to corporate improvement, when it's clear they lead to more bogus activities than valid ones. Instead of energizing individuals, they are dispiriting and create cynicism. Instead of stimulating corporate effectiveness, they lead to just-in-case and cover-your-behind activities that reduce the amount of time that could be put to productive use. Instead of promoting directness, honesty and candor, they stimulate inauthentic conversations in which people cast self-interested pursuits as essential company activities.

Culbert's piece has many sections that spell out the dysfunctions in annual reviews, including:

• They harm teamwork
• The "objective" nature is completely fake objectivity
• They create adversarial relationships between employee and manager
• Pay for "performance" is really market-driven pay (or raises) in disguise
• They impede personal development

Culbert spells out "substitute leadership" in some specific terms. The manager's job is to coach the employee to performance throughout the year, not just point fingers and grade after the fact. Culbert writes:

The boss's assignment is to guide, coach, tutor, provide oversight and generally do whatever is required to assist a subordinate to perform successfully. That's why I claim that the boss-direct report team should be held jointly accountable for the quality of work the subordinate performs. I'm sick and tired of hearing about subordinates who fail and get fired, while bosses, whose job it was to ensure subordinate effectiveness, get promoted and receive raises in pay.

I, for one, will never conduct traditional annual reviews if I have my own company. I guess I should tread lightly as the employee of a company that DOES follow this practice. But can you blame them? It's par for the course in the corporate world.

What are your experiences with annual reviews? Have you been part of an effort to abolish them or do them in a productive way, as Culbert pleads for? Does anyone have perspectives on what Toyota does, considering the influence Dr. Deming had on them?

Posted by Mark Graban on October 23, 2008 | Comments (3)