Dr. Samuel Culbert, a leading business professor from UCLA, hates performance reviews. “To my way of thinking,” he asserts, “a one-side-accountable, boss-administered review is little more than a dysfunctional pretense [to preserve authority].”

This is only one of many invective statements offered by Dr. Culbert’s recent op-ed piece in the Wall Street Journal. Yet if the reader can stand some of the stronger language used in the rant, a few of the points actually make sense. Consider the following:

The mindsets held by the two participants in a performance review work at cross-purposes. The boss wants to discuss where performance needs to be improved, while the subordinate is focused on such small issues as compensation, job progression and career advancement. The boss is thinking about missed opportunities, skill limitations and relationships that could use enhancing, while the subordinate wants to put a best foot forward believing he or she is negotiating pay. All of this puts the participants at odds, talking past each other. At best, the discussion accomplishes nothing. More likely, it creates tensions that carry over to their everyday relationships.

If you have ever been reviewed or been required to serve as a reviewer, the points outlined above may seem poignant. To the supervisor, the matter of a 1% raise versus a 4% raise is fairly trivial compared with the actual work output. Yet, to the employee struggling to feed a family and cover their bills, those points mean everything. The worker needs new job titles and responsibilities to amend their resume and direct the visible evidence of their own career path. The boss is focused almost exclusively on the work, not how the work is described in some irrelevant documentation.

Dr. Culbert also offers the painful truth about pay raises:

Another bogus element is the idea that pay is a function of performance, and that the words being spoken in a performance review will affect pay. But usually they don’t. I believe pay is primarily determined by market forces, with most jobs placed in a pay range prior to an employee’s hiring.

While you might feel like you do ten times the work of some coworkers, or metrics might prove that one of your employees is far more productive than their colleagues, no payroll budget includes room for equally dramatic variations in compensation. The obvious exception is commission-driven sales, where working smarter and harder has an impact on net pay. All other departments effectively have no special compensation for performance beyond fighting over a few percentage points at each annual raise.

Scrapping performance reviews may or may not be a good move at your company, but the willingness to explore alternate ideas is a foundation of positive organizational change. If the way to compensate, promote and sanction employees does not improve productivity, perhaps it is time to consider a comprehensive engagement of all stakeholders to rebuild the processes and metrics of your business. Contact Slaughter Development for more information.

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