Another Wake-Up Call For Why Performance Reviews Don’t Work

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Jun 24, 2014

Here is an excellent wake-up call to anyone in HR:

As the investigation into the VA scandal deepens, it appears that, according to the VA’s performance and incentive system, they were doing GREAT!

Fox News reports that Gina Farrisee, the Assistant Secretary, Office of Human Resources and Administration,

Acknowledged the need to hold VA employees and supervisors accountable, particularly regarding performance, but defended the pay bonuses.

“We must recruit and retain the best talent, many of whom require special skills in health care, information technology, management and benefits delivery,” Farrisee testified. “In particular, VA requires talented senior executives to manage the complex set of facilities and programs that VA is responsible to administer.

“Performance plans are the foundation of accountability not only for senior executives but for the entire workforce,” Farrisee’s prepared remarks continued. “Senior leadership engagement in managing executive performance plans, including counseling and mid-year assessments, also serves as the model for the general schedule workforce.”

Farrisee, who joined the agency in September, admitted to (House Committee on Veterans Affairs Committee Chair Jeff) Miller that not a single member of its senior executive service – a pool of 470 individuals – received less than a fully satisfactory or successful rating. She acknowledged that the VA’s recently exposed problems don’t jibe with an agency rewarding employees for stellar work.

‘Mr. Chairman, if we knew what we knew today at that time, it is unlikely that their performance would have reflected what it reflected at the time the reports were written,’ Farrisee responded.”

Really? So why didn’t they know then what they know now?

This whole thing makes me mad, as I AM a veteran, but from the HR perspective, I have a few theories….

1. Performance reviews are generally a token measure

Performance programs are designed by HR (or better yet, a consultant) without anyone in leadership truly understanding the purpose, the work required, and the use of the data.

So, leadership grudgingly completes the work with minimal fuss, doesn’t point out where improvements could be made, and makes the employee feel great about their performance.

2. Pay has become an entitlement

OK, so they performed great; now’s the time to pony up, right?

In 1990, when merit budgets were 14 percent, it was possible to differentiate performance and link pay. Today’s meager 2 percent budgets barely match the cost of living.

But, we’ve taught employees well that merit increase (or bonuses, in some cases) are “given” each year, and they’ve come to expect it. So managers who want to be liked tell employees that they gave them the best increase possible, but don’t mention that it’s the same on everyone else in the unit received.

3. Incentive plans have replaced management

After many years as Director of Compensation for a large financial institution that had some 1,400 incentive plans, I can tell you that managers create “kitchen sink” incentive plans that reward turning on the lights and getting to work on time, so that they don’t have to manage employees.

Then, they wonder why the plans create unintended results.

 4. Leaders aren’t held accountable for leadership

I have probably designed 40 or so performance programs in my career, and rarely can I convince a leadership team to put in a “one up” feature.

A “one up” feature means that two people in the chain review and approve a performance evaluation. Sometimes, when I ask the question – “So, you feel really comfortable that all of your subordinate managers are doing a good job evaluating their employees,” they give in and put in the feature. But all too often, time becomes a factor and even the “one up” review is cursory.

Jeepers folks, this is exactly what next level leaders should be doing – learning about how well their subordinate managers are leading!

5. Performance data is useless.

For all the reasons above, HR cannot effectively answer the question, “How is our organization’s performance?” They can pull the data, but I’m willing to bet that it doesn’t say much.

There are probably 1-2 percent in the lowest category (and we need to ask how long they’ve been there), and the majority of the employees at the top of the scale. Written comments are benign, and the performance conversations are most likely superficial.

6. Employee performance as a business issue

Executive teams spend hours in financial and operational reviews. They typically spend significantly less on performance.

Why would the performance of each and every employee and department not be a serious business issue to contemplate? It should be.

Back to the VA

Gina Farrissee at the Veterans Administration is giving the standard response that we all give when pushed about raises and bonuses – we need to attract and retain the best people.

Yes, indeed we do. But, an organization that puts pay at the top of their “attract and retain” list doesn’t have the courage to get down and dirty with employees, understand what they’re up to, what they need, and how they can improve their own – and therefore the organization’s – performance.

I’d like to say that it’s different in the private sector, but it’s really not. People are people, and managing performance is hard work. We neither select nor train our leaders to be effective leaders, so it’s no wonder we try to manage through pay and lame performance systems.

We can do better HR! This is a wake-up call for us to make performance management a key focus of our organizations.

This originally appeared on the ….@ the intersection of learning & performance blog.

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