Friday, March 4, 2011

The Dreaded Performance Review

Here is the scenario. You are a fourth-year associate at a major financial institution. It's late December, or early January. Your supervising manager summons you to his (or her) office. You know the meeting topic has nothing to do with a client, deal, financial model, or presentation. You discern the uneasiness of your manager. The calendar hints at the nature of the meeting. It's time for the dreaded performance review.

You dread it because you had no meaningful review of performance during the course of the year. You dread it because you have no clue in which direction the evaluation will swing: Outstanding? Superb? Above-average? Insufficient? Below par? Didn't meet expectations? Your manager decides.

You prepare yourself for the worst of assessments and hope for the best--good or bad, fair or unfair, subjective or objective, misleading or straightforward. If you are inexperienced, you may approach it with too much confidence, because if the boss hasn't critiqued your work in severe, traumatizing ways, you assume must doing fine.

If you have been around long enough and you understand the "game" of performance reviews, you arm yourself with statistics, lists of accomplishments, any summary output from long hours of toil, and examples of where you had a notable impact on the bottom line--all matters of record that will deflect the slings of unfair observations of what you've done the past year.

Some managers handle the performance review well. It's not a rushed, one-hour session late on New Year's Eve.  The best managers provide ongoing feedback, focus on constructive commentary, start the year with goals and objectives, and revise or update them as the year unfurls.  The best managers use metrics or objective standards to measure progress with goals and are sticklers for making the process as fair as possible. They minimize bias and try for an uplifting, forward-looking experience when giving feedback.

But some managers fail at it. Many managers, especially those in a deal-doing, trading-oriented, client-focused environments at financial institutions, will say they can't find time, energy or attention span to do this for all who report directly to them. They don't hold regular review sessions, because there are other pressures to tend to--responding to clients, boosting revenues, or preparing reports for senior managers.

So they skimp. They skip quarterly feedback sessions, or provide critiques in the form of hollow, unknowing comments or in emotional outbursts. Or they whisper their assessments to colleagues, not directly to employees.  Manager and employee during the year have countless conversations in business settings, when they plot strategies to ward off competitors, make plans to win a client over, or review details of a major presentation to senior business leaders.  But they avoid the uneasiness of having regular dialogue about how both are performing--employee and the manager. They put it off, and the manager always promises there will be an in-depth performance review at year end.

For the best managers, because they have meaningful exchange throughout the year with employees, the dreaded performance reviews are welcome, lively meetings. There is less tension. The year-end  meetings are more about setting goals and objectives for the next year.

For others, these sessions often turn out to be clumsy and difficult. The employee comes away with a superficial or unfair evaluation, or sometimes the employee emerges so scathed that he or she decides "it's time to leave the insitution." That's why some experts have a radical solution:  The formal, year-end performance review ought to be done away with. 

Samuel Culbert, a professor at Consortium school UCLA-Anderson, says performance reviews--the way they are customarily conducted--ought to be abolished. He wrote the book on it:  "Get Rid of the Performance Review! How Companies Stop Intimidating, Start Managing--and Focus on What Really Matters."  The title is a mouthful, but Culbert might be on to something.

This week he wrote about it in an Op-Ed piece in the New York Times. The essay was intended to prove the error in the ways of state politicians, who favor performance reviews of state workers vs. the restrictive review standards of unions. However, he used the Times platform to say that performance reviews, in general, whether among public-school teachers in Wisconsin or engineers at IBM or fourth-year associates at Morgan Stanley, don't work well. And he explained why.

"I've learned that they are subjective evaluations that measure how 'comfortable' a boss is with an employee," Culbert said in the Times.  "Not how much an employee contributes to overall results. they are an intimidating tool that makes employees too scared to speak their minds, lest their criticsm come back to haunt them in their annual evaluations.

"Performance reviews corrupt the system," he wrote, "by getting employees to focus on pleasing the boss, rather than on achieving desired results." (See for more about Culbert's ideas and the book.)

Culbert recommends "top-down reviews," where managers and employees together set goals and objectives, measure the progress of both parties achieving those goals, and hold both accountable. In this way, it's not about the employee messing up or trying to please the boss; it's about the manager-employee in unison making accomplishments or assessing together why they may have fallen short. In this setting, the review of performance is objective, measurable, and mutual.

He also recommends a "pre-performance review."  Those sessions are comfortable for participants, revolve around honest, open discussion of goals and accountability, and often prove to be more beneficial to employee, manager and the business group.  It eliminates the one-sidedness of performance reviews.

It does, however, require time and priority. Managers must set aside time to help employees set goals and review them throughout the year. And managers' managers must similarly provide goals and objectives and incentives to make sure they do.

Many financial institutions assess employees based on forced ranking and rating systems--arguably the primary reason why performance reviews are dreaded. Ranking and ratings make it easy for business groups to carve out pieces of the bonus pie as quickly and efficiently as possible.  For most finance professionals, a year's worth of work, projects, business trips, research, revenue generation, presentations, modeling, strategizing, risk assessment, and tough client negotiations come down to a single ranking or rating. That ranking or rating contributes to holiday stress and tension among employees. They worry and wonder about it; they can't interpret what it implies.

Often managers are pleased with the work, progress and contributions of most employees.  They may say so throughout the year in passing comments and summarize this well in performance write-ups. Some are rarely critical in written evaluations and worry that criticism will discourage the best employee and cause them to leave. But a ranking-rating system requires that they "grade on a curve."

Managers are forced to assign a rating or ranking for most employees that says bluntly they are "middle of the pack," "just getting by," or "no longer essential"--even if managers don't feel it or mean it. The ranking system requires that most employees in a group must be deemed "average," even if in a group, division or sector, a large number of them are truly outstanding.

Knowing there is such a system, the fourth-year associate above dreads performance-review day. And for all the 60-80-hour work-weeks and missed vacations and enormous output (in projects, presentations, decks, models, and travel all over the country), he or she knows the ranking may likely suggest "just average" or "just getting by."

If young professionals or MBAs early in their careers cannot squash the system or are too junior to try to overhaul it for something fair and better or something that emphasizes development and improvement, what can they do?

1.  If your manager doesn't present or articulate goals and objectives, prepare your own. This doesn't require much time; it may, nonetheless, require thought and contemplation.  Show them to the manager at the beginning of the year and schedule meetings to discuss progress during the year.

2.  Scheduling meetings with managers to discuss clients, business, revenue trends and deals is not hard. Scheduling meetings to discuss performance and solicit constructive feedback is downright difficult. Many managers put them off. Some don't like this part of management. So find ways to have informal, ongoing discussions with managers about priorities, workload, working agenda, and progress. Informal dialogue will be more comfortable and often more productive. This permits you and the manager to understand better your contributions and the factors that might affect performance.

3. Prepare your own self-assessment about twice a year. This also doesn't require much time, if you keep notes during the year of what you have done and the impact you have on a team or larger group. Include contributions, strengths, accomplishments, and measured impact on the bottom line. Include areas of improvement, new interests and activities related to recruiting and development of yourself and others. Include, too, current career plans--what you hope to do five years from now.

4. Throughout the year, show initiative and insight; be creative and helpful. Find a way to show that you are thinking three or four steps ahead of everybody else. This helps you stand out among others.

Some financial institutions endorse and implement some of these procedures. But they do so primarily to ease the burden of managers who may not be familiar with employees' specific contributions during the year. At the end of the year, be prepared to present your self-assessment, if only because it helps to create a comfortable session and will spur an immediate discussion of upcoming goals and objectives.  In this way, you manage the review of performance and minimize subjectivity, biases and emotions.

These aren't solutions to Culbert's problems with performance reviews. But they are ways for that fourth-year associate or any other recent MBA to take control and present the best side of him- or herself.

Tracy Williams

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