How to do Performance Reviews

Performance/Focal reviews happen every year for employees and are an important driver of performance yet so many companies get it so wrong so often. I as a software engineer have received many performance reviews and over time realized some important points that should help this process.

A review influences an employee’s performance in a positive or a negative way. For the manager who wants to extract high performance from his team there are two ways to leverage that, performance reviews and training. The former has more leverage than the latter. I feel the review should really target the skills/gaps of the employee and provide him with motivation to improve his/her performance.

At the same time a performance review is really an emotional time for the employee since it is the culmination of his hard work in the form of feedback and probably some monetary or responsibility based gain.

Jargon

Performance Assessment(Pre Review)

It is very important to be objective in a performance assessment. Measurement of performance should be based on output and not activity. This is to distinguish between the people who appear busy against the people who actually produce meaningful results. There might be employees who may be doing thousands of different activities with little outcome and may appear very busy. But the employees who really deliver output in my opinion are the better performers. I am not saying activities should carry zero weight. Lets take an example where a certain architecture needs to be designed. Even though that is an activity, it is a high leverage one. Secondly, if the employee just takes on less features to build in the product, it is almost as bad as performing an activity. Speed of delivery, quality and quantity should all have equal weights in a review. Hence, an assessment should be a balance of output and activity where the activities should be only high leverage tasks performed by the employee.

Reality

Another important point is that an assessment should never be based on ‘Potential’. ‘Potential’ means rewarding form rather than substance. It can cause conflicts within the peers of the same team. For rating a performance assessment of a manager we should follow a golden rule — The performance rating of a manager cannot be higher than the one we would accord to his team. This will get rid of all those managers who act like good managers but do not perform like one.

An important method a manager can use is to put himself in the employees shoes and think what he would have done if he were in his position. The variance between the approach can give the manager a good indication on where the employee stands. This off course is only possible if the manager has a fair bit of experience doing that employee’s job in the past. An assessment can also be tied to revenue. This is easier in case of Sales but difficult in many other areas . For engineers it is paramount to know the revenue impact they are having on the business. Scale, architecture and features are great but only when you can assign some $ value to it, they become some tangible values which can be quantified.

The Performance Review

Communication gap

Andy Grove mentioned the three L’s of a review: Level, Listen and Leave yourself out.

Level with your employee and be transparent with him. The review loses credibility without it. Communication is the key. There can be reasons for which the employee might be pissed and will not listen during the review, he listens but does not care or he listens and just repeats what he is being told. All these are red flags that the manager needs to know. The manager needs to be very clear and concise in what he wants to communicate.

The second one is to listen. The manager needs to listen very carefully to what the employee has to say. He has to listen not just with his ears but also look for visual cues during the review.

The third and possibly the most important one is to leave yourself out. The review is for the employee and the manager’s past hardships, guilt and insecurities should not shape his employee’s career.In the tech sector change is very rapid. Times and circumstances have changed and are very different from the manager’s time being an employee. This should be accounted for before letting the manager’s past over power the review. Don’t get me wrong, a manager’s past experience is great and required it is only that his guilt and insecurities that I am talking about.

How to do a review?

Play Safe

Process to facilitate a review should empower the employee more than the manager. I have designed a lot of processes in the past and what I have learned is that a good process marginally improves the life of people in the company but a bad one multiplies the problems exponentially. In the same way a bad review process can lead to turnover or bad morale among employees. The bad review process is really hard to spot since it may seem fair on the surface or the bad outcomes of it might be attributed to other more visible reasons. A good review process improves the integrity of the company.

When preparing a review for an employee a good idea is to put everything down on paper unfiltered and unedited. Later you can use that to build points which impact employee’s performance in a big way. This will prevent entropy. The review should not have any surprises. If you still see any it should be brought up however hard it may be. There is no excuse for bad communication in a review.

The bad performer

Blame Game

Each team has some good and some not so good performers. It is important for the manager to isolate poor performers from affecting the entire team. Encouraging poor performance can cause major rifts within the team which maybe irreparable. Usually poor performers ignore the problem. The manager needs to provide evidence of the problem to convince them. They may play the blame game which is standard defence mechanism. The change can happen only when the poor performer can admit the problem and try to find the solution. The manager has to do a fair bit of handholding here to help the poor performer to cross the bridge.

Admit it

Once the poor performer admits to improve the manager should trust him and help him along the way. Not accepting the fact that he is trying to improve is also negative on the manager’s part.

The star performer:

The star performer usually gets the worst side of the bargain in any performance review. When he consistently delivers results the manager gives him a great review for his performance. He concentrates less on the areas he can improve on. Sometimes he may add one or two just to bring some to his attention. Remember a 5–10% improvement in the best performer in your team can bring an exponential improvement to team’s performance and to your own performance. But still we fail to provide the feedback which will help him get there.

Stars

For a poor performer the manager will usually give many pointers, training opportunity and handholding. The marginal improvement of the poor performer is not going to drastically improve the team but that of a star performer can do wonders. It is best to deliver all negative feedback a manager has for a star performer however minute in a constructive way. This will boost his morale and help him improve more. I feel the star performer’s review should have more critique than a normal or a poor performer’s review just because that is where there is maximum leverage for the manager.

Best Practices:

• Who writes the review first? If the employee writes his review first you can have a look reply in your own words and send it back. Does this do justice to the employee? No. The manager should write his review first. The employee can read the manager’s feedback and then do his own review independently. This helps the employee understand the manager’s context as well. If the employee thinks he is on earth but the manager’s context is that of Mars, the employee has to understand his context more clearly. Also if they are that far off the employee might be better elsewhere. This is not possible if the employee writes his review first.

New Hire

• Should the manager provide the review beforehand or just make it available during the meeting? If it happens during the meeting then there maybe talking London walking Tokyo. In other words the manager is delivering point X and the employee is stuck at point Y. For making the most productive review process, if the manager provides the review in advance the employee can learn more, understand context and be better prepared for the meeting.
• When should the employee do his review? Best time would be between the manager’s written review and the review meeting. This will help him collect his thoughts and be emotionally and rationally ready for the face to face discussion.

Good managers

• The review if done yearly should take into account yearly performance and not the performance of the last three months. It is easy to write a review based on the last three months but that would just be injustice to the employee’s hard work. Good managers will never do this mistake.
• What should be the timeline of the review process? The whole time between the managers written review, employee’s review leading to the review meeting should not be more than two weeks long. The more the time the more the chances of additional entropy in the translation. Tech tools should be leveraged in all possible ways to enable this process.
• High level managers should randomly request middle level managers to submit their employee’s reviews to them for assessment. High level managers can provide suggestions to their direct reports to improve them based on his experience. This should be done with as much visibility and noise so as to affirm the importance of the process. This will help everyone in his chain do the review with dignity. This can improve his middle level manager’s leverage thereby improving his own leverage.

All review methods will have gaps and problems including the one above. However the best methods will have the highest leverage. Hence, when designing a review process for your team/company always optimize for leverage.