Professor Channels W. Edwards Deming and Writes "Get Rid of the Annual Review"

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?