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The Honestly Subjective Performance Review (HSPR)

February 12th, 2006 · 8 Comments

It’s that time of year again in corporate America. Managers and executives everywhere are sitting down with their employees to review their performance over the past year.

Take Tim, for example. He’s a senior manager in a small technology company, and all of his direct reports are project managers. Tim is, at this very moment, considering three of those project managers: Brook, Sam, and Alex. He summarizes the year for each of them quickly in his head:
Brook: Got stuck in project prioirity churn the entire year. Wasn’t his fault necessarily, but as a result Tim didn’t really get a sense of how he could perform. It’s hard to tell if a PM is any good when their assignment is constantly changing.
Sam: Delivered her two projects right on time. She’s new to managing projects, and required a great deal of coaching. Now it’s time to cut the umbilical cord and set her free to see what she can do.
Alex: Alex is, in many ways, the quintessential queen of project management. She frequently manages five or more complex projects at the same time and the end product is always right on target, if not always on time. She is frequently short-tempered with her project team, her peers, and, less frequently, Tim, but she has a rock-solid reputation for getting it done.

How should Tim review these three? What data from the past year should be used to “rank” these three employees and determine how to reward them?

The typical solution to this is to take a nice set of corporate objectives and compare Sam, Alex, and Brook’s past year against them. These objectives might look something like this:

  • Uses standard project management processes and procedures
  • Delivers assigned projects on time and on budget with the desired results
  • Communicates professionally at all times
  • etc
  • Tim might take a look at these objectives, think about what happened over the past year, and then assign scores to each of these objectives based on his perceptions. These scores usually indicate how well each of these objectives were met and translate to things like “met”, “failed to meet”, “exceeded”, “vastly exceeded”, “almost met”, etc. These scores are then used to establish acceptable ranges for salary increases, bonuses, etc.

    What do you do in your workplace? Is this how you get evaluated? What do you think of it?

    I think it stinks, and I’m going to tell you why. This type of approach is used all over America’s largest companies in various flavors, and I believe it is a total failure. Here’s why

    Performance reviews are backward looking when they should be forward looking.
    When Tim hired Alex, Sam, and Brook, he didn’t base the salary he offered them on their previous year’s performance. He didn’t really have any objective data about their past performance. Instead, he offered them salaries based on the value he perceived they would add by joining his team. Backward-looking reward systems are counter-productive because the employee has already been rewarded for the past. That’s what the twelve months of paychecks were.

    Performance against objectives doesn’t actually correlate to value added.
    There’s really not a good way to measure performance, even when objectives are clearly defined (which is extremely rare). When they are poorly written, it becomes impossible. Look at the objectives we mentioned earlier. Are any of those objectives exceedable in ways that are actually good for the organization? Sure, Sam could deliver projects in half the time estimated just by doubling the estimate. And Brook could invent new project management methodologies while Alex learns to hug her team members when they fail, but is this really helpful to the organization? Exceeding these objectives doesn’t actually add any value to the organization.

    Objective-based reviews are insulting to intelligent people.
    This approach to performance reviews was created with the good intention of rewarding performance by creating an objective way of it. Unfortunately, even the simplest of tasks is very difficult to measure with any degree of accuracy. In the end, performance reviews are simply facades of objectivity that attempt to hide the complete subjectivity of the review behind five to ten pages of anecdotal evidence about the employee’s successes and failures.

    In depth performance reviews are too time-consuming for managers to do effectively.
    Too many employees write their own performance reviews, which their managers edit briefly and assign a totally arbitrary score to. Or the manager writes several “boilerplate” review paragraphs which he then reuses over and over. None of this is helpful.

    Performance reviews frequently punish the children for the sins of the parents.
    Look back at Tim’s assessment of the three project managers. How many of these are actually his issues, not his employee’s? Brook’s shifting assignments, Sam’s growth, and Alex’s workload are all issues that Tim ought to identify as his responsibility and create a plan to fix them.

    Backward-looking reward systems are also insulting.
    Being required to toil away for twelve months in the anticipation that at the end of the year Alex, Sam, and Brook will be rewarded (or punished) for what they’ve done is just plain stupid. They should be paid for the value they are expected to provide now, not the the value they provided last year. If employees are paid less than they are worth, the marketplace will be a constant temptation.

    Objective-based reviews ignore the intangible contributions of employees
    Some employees make everyone better, others make everyone worse. Both of these types are equally distributed across the performance spectrum. Objective-based reviews don’t capture the value of the intangibles.

    So, how does this get fixed? How do managers take performance reviews and turn them into something useful? First, make the performance review honest and open by embracing its subjectivity. The value of the performance review should come from its subjectivity, not its objectivity. The good judgment of the manager should be more important than a simple checklist of objectives. Use the same good judgment that got the employee hired in the first place to determine how that employee should be rewarded. Second, make rewards an expression of what is expected rather than what has been achieved. Doing it any other way is like paying an employee twelve months in arrears perpetually. This drives good employees back to the marketplace, where they can be rewarded for what is expected now for at least one year. Bad employees will stick around as long as possible since they are overpaid to begin with.

    The Honestly Subjective Performance Review (HSPR)

    So, what is the honestly subjective performance review? How is it executed?

    The good news is the HSPR, as I like to call it, is simple to perform. Ask employess to help create a list of problems that need to be fixed in the upcoming year. Tim did this and as a result created the following list of problems:

  • Brook needs projects that have firm commitments from the organization
  • Sam needs a “trial by fire” experience to test her abilities
  • Alex needs a lighter load
  • Once he has this list, Tim needs to make a plan. In this case, part of it is easy. Take some of Alex’s work and give it to Sam and Brook. That helps all three project managers. Tim still needs to figure out how to firm up the commitments of the projects that had once been assigned to Brook, but that’s what he’s there for. He’ll have to use the good judgment that makes him so valuable and figure out how to do this. Fortunately, he’ll have more time to devote to this task, because he has already finished the backward looking part of the performance review!

    The next part of the honestly subjective performance review is forward looking and focused on reward. It is based on a simple premise: considering the quality of work that you expect to recieve from an employee in the upcoming months is a more accurate measure of their total package of capabilities than evaluating accomplishments and failures of the past against a vague set of poorly documented objectives.

    It is done by asking a simple question about each employee: What assignments would you feel confident giving them over the next year with a reasonable expectation that they could pull it off? This question needs to be customized for the type of staff being managed, but that’s why managers need good judgment. If they’ve got it, they can do this. Here’s the list of questions Tim came up with:

  • Who would be my first choice for a critical project with extremly high technical complexity, massive visibility, and impossible timelines? Second? Third? etc.
  • Who would be my first choice to facilitate a meeting with a project team to resolve a problem that is currently buried under intensely bitter conflict? Second? Third? etc.
  • Who would be my first choice to present the findings of an analysis effort to a project sponsor if the results contradict the sponsor’s expectations?
  • etc…
  • Once he had his questions, Tim came up with preliminary answers for them, then discussed the results of the questions with each of his project managers. Together, they drove out consensus about the value that each project manager should be able to add over the ensuing year. In the process, Tim used his good judgment, coupled with his solid management skills, to strengthen his relationship with each of the employees and to find ways he could add even more value as a manager by removing obstacles to success that Alex, Sam, and Brook brought to his attention in the discussion.

    The final step: compensate. Reward appropriately. Now that Tim knows the value he expects Sam, Brook, and Alex to contribute, he can assign a price to it. That’s what they should be paid.

    My Theory

    The theory behind the HSPR is simple. Most people have a pretty good nose for bull. Any claim of “objectivity” by a person (or process) is bull. It is an indication of dishonest subjectivity. Objectivty in humans doesn’t actually exist, so we should embrace our subjectivity. Rather than putting systems in place to limit its impact, we should train and develop our subjectivity and turn it into a term I have intentionally used over and over in this article: good judgment.

    I believe a review that is openly, honestly subjective reveals much more about both participants in the review process than one that attempts to be objective. If the manager has poor judgment, the HSPR will rapidly expose this. If the employee lacks the capabilities needed for the future, this will also be exposed. And if the employee is a diamond in the rough who only needs to be given the right opportunity to demonstrate her capabilities, a manager with good judgment will have the tools to recognize this and reward it.

    Finally, the HSPR forces a manager to take the whole employee package into consideration, not just those capabilities that tie directly back to a set of objectives. It allows him to give credit for the intangible value an employee adds as well as the tangible, and it rewards the employee today for that value.

    I welcome your comments.

    NOTE: Tim, his colleagues, and the company he works for are all completely fictitious. Any resemblance to real people, etc. is completely coincidental.

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    Tags: Job Advice

    8 responses so far ↓

    • 1 Mike Kelly // Mar 1, 2006 at 6:05 pm

      Fire them all!

      No really. One of the things your post made me think of is that if you enter the performance review like an interview, you would again be evaluating future performance instead of past performance. While I’m not advocating actually firing people (that’s cool if you’re my manager but others might not deal with that as well as I would), I do think the mind set is valuable.

      If performance reviews are backward looking when they should be forward looking, we need to find another way of thinking about what their purpose is. Are you simply evaluating bonuses? Then a backward looking review may be fine. Are you thinking about staffing future projects? Then you may want to think of everyone like you are interviewing them for the first time. Are you thinking about something else entirely and you just need to do the performance review so YOUR manager will leave you alone? Then it doesn’t matter what you do, most likely you are doomed either way.

      If you can’t tell by me post, I’m bitter about the idea of annual performance reviews. It’s the number one reason I became a consultant. I prefer continuous feedback. The type you talk about in your Instant Feedback post and the type Rothman and Derby talk about in their book “Behind Closed Doors: Secrets of Great Management.” It’s one of the most de-motivating management practices I know of.

    • 2 Artem // Mar 18, 2006 at 6:25 pm

      Do you have ANY practical experience of applying HSPR? At least partially

    • 3 dave // Mar 18, 2006 at 8:08 pm

      Excellent question, Artem. I just wish you had finished your comment! I’m very curious what you had to say, but it seems incomplete.

      At any rate, my experience with the HSPR is limited to the hiring process – these are forcibly subjective because you just don’t know enough about the candidate to do anything other than make an openly subjective call about the value you expect them to add in the future.

      Like most IT folks, I have tons of experience with the dishonestly subjective performance review (the “objective” based review) and I know that it sucks.

      Is there anyone out there who has been through a performance review that was future looking and openly subjective? I’d love to hear your story.

    • 4 Information Technology Dark Side » Blog Archive » The Honestly Subjective Performance Review // Dec 7, 2006 at 6:46 am

      [...] Anyway, here’s the old post: The Honestly Subjective Performance Review [...]

    • 5 Mike Kelly’s blog » Blog Archive » Information Technology Dark Side // Nov 1, 2008 at 8:34 pm

      [...] The Honestly Subjective Performance Review [...]

    • 6 Nitin // Jul 16, 2010 at 5:03 am

      Yes, I have been part of developing and delivering great reviews. It all depends on how the system is defined/used.
      At one company I worked, performance reviews involved, discussing work/life balance, discusing next steps, career aspirations and documenting it in separate steps as a part of the review. The discussion was about the employee, the company and how to align these. When you finally get to performance, you are able to look at past performance, future aspirations and plan developmental needs/feedback all in one sitting. Behaviour, not just results, accounted for 50% of the over all evaluation. So you were not allowed to be successful over a few dead bodies.

      In the end, what I have to say, I have seen a few different tools in my career. It all comes down to how you look at it, how you intend to use it and how much are you willing to put into the process. Yes, it is cumbersome, but so is developing next round of leaders to keep the business going.

    • 7 Nitin // Jul 16, 2010 at 5:07 am

      One team I had on their account, also did the process of peer feedback. The feedback was submitted to the manager. The rule here was, this was purely used for feedback from peers and not performance evaluations. It was anonymous, compiled by the manager and delivered to the employee. Was done once a year but never used for performance evaluations. It was a great feedback tool, without any threats.

    • 8 Ann // Feb 8, 2013 at 9:20 am

      On the thought that performance reviews are supposed to be forward looking: The only way to appropriately look forward is to review past trends and track records, only then can you assess one’s potential for the future.

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