VIDEO: 10 Reasons Performance Review Software Doesn’t Work

By Sean Abbas on July 12, 2013

I’ve had to give and receive hundreds of performance reviews over my 30 year career. As an employee, manager and company leader, I’ve learned a few things about performance reviews.

First, your performance review software has an approval rating lower than Congress. That’s right, less than 1 in 10 people find any value in the performance review process.

  Christmas presents have an approval rating of 99.9%

Christmas presents have an approval rating of 99.9%

Second, nearly every organization is using the same type of system. The linear scale, 1-5 ratings, computer suggested comments, blah, blah, blah.

Here are 10 reasons why your performance review software is failing your organization:

1) Performance review software doesn’t reflect reality. The reality of what you know about the people in your organization and what your performance reviews say is completely different.  Everyone is not “Meeting Expectations.”  How many times have you had to terminate an employee for cause and their performance review said “Meeting Expectations”?  How many times have you promoted someone because they are knocking it out of the park and their review said “Meeting Expectations”?

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2) Computer generated sentences aren’t genuine. Your people know if you have actually taken the time to put real words and thought in to their feedback.  Are you discussing the things that matter to their job and to the success of your organization?  Having your performance review software spit out sentence fragments from a competency library will never substitute for real communication.  If you are trying to get reviews done with the least amount of time and thought possible, your people will give them the least amount of value.

3) Managers want to avoid confrontation. I once had a manager with a difficult person to review.  He gave a softball review to that employee in their one-to-one.  Then the manager took the signature page from the softball review, attached it to a more challenging review and gave the hybrid document to HR.  Most people will go to great lengths to avoid a confrontation.  The performance review process is set up with many places to hide.

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4) Performance reviews can’t be tied to pay. We all like to say that we pay for performance.  But how do we do that when our performance review software says 99% of our people are “Meeting Expectations”?  We are left to either treat everyone the same regardless of their actual contribution or we have to make compensation decisions separately from people’s reviews.  The result is confusion for your managers and employees.

5) Self reviews only help the people not doing their jobs. The only people who are actually harder on themselves than they deserve are your good people that you never worry about.  The people with issues always, without fail will say they are “Meeting Expectations” and challenge their managers to say differently.  The good employees want honest feedback from their manager, while the people with issues use self reviews as place to hide.

6) 360 Reviews and Peer Reviews produce worse communication. Making a failed system more complicated does not produce better communication.  Do you really think an employee is going to be completely honest with their manager?  Are their friends going to give them low scores?  Are the people they are competing with for bonuses and promotions going to say you are better?  How many times have managers had to explain 360 feedback that contradicts the manager’s review of that employee?  Ask them.  It happens a lot.

7) The 1-5 performance review scale provides cover for destructive behavior. The linear rating scale in the performance review process is a failure of monumental proportions.  Performance review systems mix values and results together for one score.  You can be great at your job (a “5”), a jerk to your coworkers (a “1”) and meet expectations (average of a “3”). You can be a really nice person (a “5”), not produce results (a “1”) and meet expectations (average of a “3”).  Are people that fail in one of these areas really meeting your expectations?

8) Your managers’ hands are tied. Ever notice now the easy reviews are always done on time and the difficult reviews have scheduling conflicts?  It’s like magic.  The performance reviews managers don’t want to do are the ones where they can’t communicate effectively with the employee.  If a manager wants to have a difficult conversation about something that needs to change, the performance review document always says “Meeting Expectations.”  That employee hears, “Go ahead and continue doing as you please.  Even though I want you to change these key things you are meeting my expectations.”

9) We don’t actually believe in performance reviews. Let’s be honest.  We truthfully see no correlation between performance reviews and our organizations being successful in any way, shape or form.  How many times have you sat down with someone and said, “This is a formality, we just have to check the box.”  We ask our managers to do performance reviews because we are supposed to, but we gave up on finding a better method a long time ago.  When employees and managers know you don’t believe in them, neither will they.

10) You are wasting time and money. The typical performance review process requires training, filling out the forms, delivering the review and reviewing the documents when you are finished. Let’s assume we have an hour from HR to train, an hour for you to listen, 2 hours to prepare, an hour for the employee to get the review and an hour for you to give it. Add an hour for HR to administer each review. That’s 7 hours total, at a weighted average cost of $50 per hour for time and overhead.  We are spending $350 per employee. If you have 50 employees, you are spending $17,500 on a process that less than 10% of your people find any value in doing.