Updated on Jan 24, 2023
By BJ Gallagher
Edited by AMA Staff
Is there anyone in the workplace who has not undergone the torture of a performance review done badly? I’m sure we have all had to endure the torment of a well-intentioned but badly-executed performance appraisal—in which we felt as if we were the ones being executed! Blindfold, anyone? Got any last words before the verbal assault begins? I don’t even smoke but I’m tempted to ask for a final cigarette!
Most performance review systems in most organizations are so poorly designed and conducted that they actually do more harm than good. I often tell my clients that they would be better off doing nothing rather than doing what they’re currently doing! I’m not kidding.
For new managers especially, it can be overwhelming conducting and presenting performance reviews if you're not used to the process. Here are 10 common mistakes managers make, and tips for avoiding them. These are practical action steps you can take to design and implement a system that will do what you want it to do—improve performance!
Do Not Serve as Judge and Jury
Mistake: The performance review is a one-way, top-down process in which the boss serves as judge and jury of employees’ behavior and achievements on the job.
Solution: Make it a two-way process, at the very least. (If you really want an effective review system, design a 360-degree system that involves peer reviews as well as a self-review.) The employee should have written a self-appraisal prior to the meeting with his or her boss—a written document comparable to what the boss is preparing. That way, both people in the meeting will be focused on the documentation of job performance, instead of the boss focusing on the employee. Remember: We do not evaluate people—we evaluate their results.
After a brief setting-the-tone introductory comment or two by the boss, the employee should be invited to go over his or her self-appraisal first. This helps eliminate defensiveness and gets the meeting off to a good start by establishing that it is a dialogue, a two-way conversation in which both parties can share observations, perspectives, and comments about job performance.
You’ll find that your top performers will usually rate themselves lower than you do. That’s because they have high expectations for themselves—often higher than you have for them. You’ll find that the opposite is also true: Your poorest performers will often rate themselves higher than you rate them. Whatever the situation, talking about the gap between your evaluation and theirs will be fruitful in getting you both on the same page (both literally and figuratively) in terms of future expectations.
Review for Development or Compensation - Not Both
Mistake: The review process tries to serve as a coaching tool for employee development, as well as a compensation tool to decide salary increases.
Solution: Your performance reviews should be done for either development OR for compensation—not both. If you’re interested in coaching and development for improved results in the future, then unhook compensation from the process and focus only on the work itself. Conduct your performance review discussions as far away as you can from the time of year when salary decisions are made.
If you’re doing reviews in order to make salary decisions, that’s fine—just be clear that that’s what you’re doing. Then you can conduct your review conversations in the few weeks just before raises are announced.
The problem with trying to combine both employee development and compensation decisions in the same session is that employees are only going to pay attention to the money—all the rest will go in one ear and out the other. You will get no coaching benefits from such a conversation. Employees will appear to be paying attention to what you’re saying about their performance, but they’re really just waiting to hear the magic number. Money talks—all else is lost.
Be Positioned to Adequately Review the Employee
Mistake: The person doing the appraisal has little or no day-to-day contact with the employee whose performance is being judged.
Solution: This one is a no-brainer. The person having review conversations with an employee should be the supervisor or manager who has the most contact with that employee and is in the best position to accurately assess day-to-day results.
Provide Enough Notice of the Employee Performance Review
Mistake: Employees receive little or no advance notice of their “Judgment Day.”
Solution: Performance discussions ideally should be conducted on a regular basis, on a schedule well-known and well-publicized to everyone in the organization.
Provide Well-Documented Feedback
Mistake: Managers are vague in their feedback to employees. Or they assign arbitrary numerical “grades” with little or no substantiation.
Solution: Performance feedback needs to be well documented in order to be effective. Here’s where it helps to have a good paper trail—documentation of both the good results and the not-so-good results.
Don’t rely on your memory in outlining how well the employee achieved his or her goals and met your expectations. (The human memory is a mismatch detector and it will always do a good job of remembering the bad stuff, while forgetting the good stuff.) Keep a file on each person who reports to you, and make regular notes to yourself on behavior and results as you observe them—the good, the bad, and yes, even the ugly. Encourage your employees to keep files for themselves, so that they, too, have documentation when they are writing their self-appraisals. Mutual documentation helps keep everyone’s focus on the job, not on the person.
Evaluate Behaviors and Results - Not Traits
Mistake: The review process tries to evaluate traits, rather than behaviors and results.
Solution: This is one of the most common mistakes I see on performance review forms—they try to evaluate personal traits, such as leadership, motivation, conscientiousness, attitude and so on. The problem with traits is that they are internal and subjective— almost impossible to evaluate on a fair basis.
Instead of traits, keep your evaluation focused on two things: Behaviors and results. Behaviors are actions that you can observe directly—she did the filing, he answered the phone, she called on customers, he repaired the machines, and so on. Results are also observable: She achieved her sales quota, he reduced waste by X%, she increased productivity by X amount, he completed his projects on time, and so on.
Abandon the "Once Per Year" Performance Review
Mistake: The appraisal is a once-a-year event that everyone tries to get through as quickly as they can, because it’s painful for bosses and employees alike.
Solution: The primary goal in evaluating performance is to improve it. Therefore, you want to design a meaningful system of coaching conversations that people welcome, find useful, and deem valuable. Employees need regular feedback on how they’re doing—what they’re doing well and what needs improvement. Once a year just doesn’t cut it. Design a simple, easy to use system that encourages bosses and employees to engage in two-way conversations throughout the year—that’s the only way you’ll get any real mileage out of a performance review system.
Identify the Cause of Poor Performance
Mistake: There is no investigation of causes that underlie employees’ job performance problems.
Solution: People don’t perform poorly for no reason. There are always causes—but you’ll never know what those causes are if you don’t make the review process one of give and take, support and coaching, with both parties focused on the same objective—doing the best job possible.
If an employee is performing poorly, ask questions. Don’t assume you know the reason—or jump to conclusions that he’s lazy, she’s dumb, he’s unmotivated, or she’s incompetent. Use your performance review conversations as opportunities to find out what are the possible reasons for an employee’s failure to meet standards and expectations. Hint: When an employee fails to perform adequately, the primary reason is often the boss’s failure to coach!
Have Next Steps for Positive and Practical Solutions
Mistake: There is no follow-up action plan put in place at the end of the performance appraisal.
Solution: The final thing to discuss in a performance review conversation is “What next?” What steps does the employee need to take to make sure that areas for improvement actually improve? And what support does the employee need from you to make that happen? An action plan is the perfect element to conclude an effective performance review discussion. Keep it simple. Three or four next steps are just fine. Remember, this is the beginning of the next cycle in the coaching process. Keep it positive and practical.
Abandon the "Pay-for-Performance" Model
Mistake: Any attempt at pay-for-performance is ineffective because the difference in pay for a top performer and a mediocre performer is so small as to be meaningless.
Solution: Well-intentioned attempts at pay-for-performance often backfire because there is too little money available OR management is unwilling to make the hard choices about giving big increases to top performers and no increases to poor performers. So they try to offer a token of performance-based pay, which often backfires. The difference between a 3% increase and a 4% increase is meaningless in any real financial terms—and all it does is create jealousy, hurt feelings, and resentment among employees. My advice: If you can’t come up with REAL money for REAL pay for performance, don’t do it at all. You’re better off giving everyone the same percentage increase.
Are you a new manager trying to learn the ropes on the job? The AMA provides many resources to help make the transition easier, including this webinar for new managers. Or continue your leadership training with our seminar on Preparing to Lead.
Learn more about managing performance reviews with the AMA webinar:
Difficult Performance Reviews: How to Turn Painful Conversations into Positive Results
Related articles on managing employees and performance:
About the Author
BJ Gallagher is a Los Angeles workplace consultant, speaker, and author of YES Lives in the Land of NO: A Tale of Triumph Over Negativity (Berrett-Koehler; 2006). You can follow her on Linkedin.
American Management Association is a world leader in professional development, advancing the skills of individuals to drive business success. AMA’s approach to improving performance combines experiential learning—“learning through doing”—with opportunities for ongoing professional growth at every step of one’s career journey. AMA supports the goals of individuals and organizations through a complete range of products and services, including seminars, Webcasts and podcasts, conferences, corporate and government solutions, business books and research.