What’s wrong with annual performance reviews?
The theme of this year’s International Women’s Day is inclusivity. In organizations, inclusivity covers policies and actions which seek to support a diverse workplace because, not only is this the right thing to do, but studies show diversity leads to better business outcomes. One way to measure how an employee is doing is through the oft-dreaded process known as the annual performance review.
We know the drill: manager and employee sit down to review the employee’s past performance against set goals. Performance reviews form the basis of pay raises, bonuses, and promotions. Despite their ubiquity, performance reviews are imperfect measures of achievement, especially for a diverse workforce. For example, studies show that gender plays a role in how employers rate employee performance, and, also how the employee rates herself. Quantitative rankings are especially susceptible to gender bias.
Most ranking systems use a 1-to-10 scale. A recent study has shown that under this type of rating scale, women receive lower scores than men. The researchers concluded that the concept of “10-out-10” denotes being “a star” and “exceptional”, and that gender bias prevents evaluators from giving this score to women whose performance is more closely scrutinized than men’s. To test whether changing the rating scale would affect gender bias, the researchers asked subjects to evaluate an academic transcript. In all cases, the transcript was identical, the only variable was the gender of the teacher who was either listed as Professor John Anderson or Professor Julie Anderson.
The study found that, on a 6-point scale, gender bias was totally eliminated. Because a “6-out-of-6” is considered merely “very good” whereas a “10-out-of-10” is considered “excellent”, people were more open to giving top marks to both women and men. For organizations seeking to make their performance appraisal process more inclusive, changing the rating scale is a quick and cost-effective way to do this. And, because performance reviews directly impact promotability, higher scores for female employees should lead to higher wages and greater representation of women in senior roles.
Managing bias better to optimize performance reviews
Other ways senior leaders can optimize the performance review process to achieve greater inclusivity is to provide skills training and support to both managers and employees.
Raise awareness of different biases
In a recent Harvard Business Review study, the performance reviews of 81,000 leaders were evaluated on various subjective measures. Compared to men, female leaders were more frequently described in negative terms such as “frivolous”, “gossip” or “scattered”. Subjective measures are susceptible to gender stereotyping and cultural bias. When they are locked into a performance review, they could negatively impact career advancement.
Bias in self-reporting
Studies show that men consistently rank their performance 33 per cent higher than women do— even after they are faced with their actual performance rank within their peer group. Women are more likely to rate themselves below their actual performance and focus more on areas that need improvement. In addition, people from different cultures may be less comfortable with the self-boasting embedded in the traditional performance review process. Business leaders need to be aware of how biases can distort performance reviews and then develop guidelines to address them more effectively.
three Top Tips for Employees and Employers
- Go quarterly, not yearly
By formalizing mini reviews each quarter, the annual review process should be more efficient with a focus on next year’s goals instead of simply rehashing the past year or dwelling on recent events.
- Be your own PR manager
It’s often difficult to remember what happened many months prior and managers cannot be expected to track every detail of performance. Maintaining a calendar of key achievements and how these align with the business goals of the organization, makes the performance review process more accurate.
- Take time to reflect
The review is co-production between manager and employee. Instead of feeling rushed to set (manager) and accept (employee) new projects and goals, it’s important to take time to reflect before committing. Critiques of employee performance should be backed up with examples and/or data to eliminate the risk of bias and to get both individuals on the same page to remedy the issue. And remember, in organizations, inclusivity is a line, not a dot. Inclusivity is an evolving process and the hallmark of a thriving workplace and learning culture.