The Performance Review: More Harm Than Good?

Today in the podcast, we discuss …performance reviews, also known as performance appraisals or annual reviews, along with the overall idea of managing performance for employees in organizations.  Regarding the formal performance review, we’ll talk about why doing these is a GOOD idea.  We’ll also talk about how they can be problematic along with some key implications and considerations for employees and managers.

Show Notes and Resources

*FYI, when you search “performance review” on Google Scholar and limit the results to the last 5 years, there’s basically nothing. The first thing that pops up is about MR imaging…then there’s something from on storm water management LOL! I think it’s fascinating that something so popular as the performance review basically turns up crickets in the academic space. I get a few more relevant results when I search “performance appraisal,” but “performance review” is basically nada.*

Aguinis, H., & Pierce, C. A. (2008). Enhancing the relevance of organizational behavior by embracing performance management research. Journal of Organizational Behavior, 29, 139-145.

• This article is actually about why OB scholars should research the topic of performance appraisals, which is not super relevant…
• • HOWEVER: this is an interesting introduction to the topic of the performance review because it specifically talks about the science-practice gap that is large for this particular topic (p. 139) which I think would be an interesting point for you guys to make 
• There’s also a helpful overview of performance appraisal vs. performance management in case you guys get into that distinction (p. 140)

DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102, 421-433. 

• An overview/review article of the academic on performance appraisals 
• Reviews each of the following categories in case you guys are talking about any of them: 
• • Scale format: turns out that variations in scale formats had only modest
  • effects on the quality of rating data 
  • Training: there is consensus that training raters what not to do is ineffective. There is also consensus that training raters to adopt consistent conceptions of what represents good versus poor performance/what behaviors and competencies constitute performance is beneficial.
  • Reactions to appraisals: justice is important! If high justice isn’t perceived in the performance appraisal, then employees will have negative reactions 

• Rating source: obtaining information from different sources can be useful, but different sources differ systematically in the conclusions they suggest about overall performance levels, and that evaluations from others are likely to be less favorable than self-evaluations 

• Demographic effects: In some settings (especially laboratory studies), demographic variables can influence performance ratings. However, in the field, these variables do not have a large effect on performance ratings

Cappelli, P., & Tavis, A. (2016). The performance management revolution. Harvard Business Review, 58-67. 

*I know this isn’t an academic article, but it’s honestly the best I found in terms of content…just wanted to make sure you guys had read it...*

• By some estimates, more than one-third of U.S. companies have ditched traditional performance reviews 

• Biggest limitation of annual reviews: with their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behavior at the expense of improving current performance and grooming talent for the future, both of which are critical for organizations’ long-term survival

• Really interesting history of talent management timeline starting in the middle of the article (“How We Got Here” section) 
• 3 reasons to drop appraisals: improves employee development, more frequent feedback is in line with agile methodology, fosters teamwork