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Channel: Tis Leigh – Tis But A Moment
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No More Caps & Quotas for Performance Reviews

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Photo by Christin Hume on Unsplash

Happy New Year! It’s officially 2022 and with the new year comes performance reviews. If your company is anything like mine, you have experienced the baffling mess that is a “bell curve” system to rate employees against each other’s performance, oftentimes determined by a higher-up that has no understanding of everyone’s contributions.

As someone who works in the HR + Talent field, I’ve seen this deliver these consistent results:

  1. Upsetting higher-performing talent by undervaluing them on paper for the sake of a capped system;
  2. Lost faith in managers because they can’t adequately justify a review with actual or actionable feedback;
  3. Lost productivity overall – both because the employee lost motivation (or is looking for a job, or left), and because other employees have to pick up the slack;
  4. Positions vacated because folks want to find workplaces that will treat them with more respect; and
  5. Higher costs to the business because, surprise, folks in the job market are looking for more competitive pay rates than folks who’ve been otherwise happy with their work.

Most companies choose to cap performance review rating “tiers” because of budget. Employees in the top tier get the top bonus payout or merit increase, so logically there has to be a limit to how much is paid out, right? Well, sure. But following an arbitrary percentage scale or cap for each performance ranking isn’t efficient or accurate…

Especially now when so many companies are struggling to hit targets going into year 3 of a global pandemic, a lot of businesses are holding onto systems that only worked with competitive compensation.

The consumer price index climbed 7% in 2021 – that’s an almost 50-year high. Most businesses haven’t been able to keep up with even cost of living increases this year, let alone stay competitive in the market. And heck, those cost of living increases don’t even keep up with inflation. 2021’s average salary budgets increased by only 3.0 percent.

And employees aren’t stupid! They know that we’re not keeping up. We’re watching record numbers of employees choose to leave their jobs, increasingly without anything else lined up. The jobs we once sought for financial security are no longer capable of offering it, and people are more willing than ever to forge ahead on their own. For the work to be worth it, companies have to incentivize their teams with more than money – because we can’t afford not to anymore. And negging your staff won’t help.

It’s folly to pretend a business that’s ALREADY underpaying its workforce can or should tie performance reviews to a capped (and lacking) financial incentive.

I work for my dream company, and that privilege comes at a cost – literally. I knew coming in that my earning potential would be lower here than anywhere else because it’s a mission-driven organization that can’t support market salaries. Which makes it painfully stupid that we tie performance acknowledgments to money!

Staring down the barrel at another annual performance review period that asks managers to fill buckets for ratings, rather than honestly appraise an employee’s contributions as an individual, sets my teeth on edge. The people I work with are wonderful, hard-working, creative, and do more than they’re asked. And every year, our performance ratings undermine their impact and cause them to look elsewhere.

So, today I had enough. I rallied a group at work to discuss options and sent our C-Level leadership this email…

Hi [Senior Leadership],

I’d like to talk with you about how the “Bell Curve” element of our performance review process is hurting the org.

Historically we’ve seen a spike in turnover every Spring. In past years we attributed that to folks waiting for their bonuses so they could cash out and move on. However, even with 2020’s lack of bonus (communicated clearly and well ahead of time), that trend continued in Spring 2021. I believe this is because our bell curve rating system hurts the org, impedes morale, and leaves employees we would like to retain feeling undervalued – because they are, at least by our bell curve scale.

It also hurts productivity – both because of the drop in morale for affected employees (who receive a poor rating that their own managers can only justify “because of the bell curve”), but also for their coworkers and for the HR Team specifically. I’ve shared this with the HR Team but last year alone, more than half a dozen employees spoke with me immediately after their reviews either because they needed to re-read their job descriptions and compare job expectations to their ratings, or because they were considering leaving the org and wanted to talk to me as their Recruiter or as a trusted colleague on the HR Team.

The Bell Curve in our Performance Review system used to serve a purpose. It was connected to bonus payouts and we had to put reasonable caps in place. This is no longer the case. I understand that it’s connected to merit increases now and we don’t want managers to overly inflate their team’s performance rating for any reason, but we don’t want to discourage managers from duly recognizing employees, either. Is a bell curve the best method to prevent either outcome?

We know that we’re not compensating everyone at market rates, and we specifically attract talent that is motivated to come to our organization for our values, mission, and team – very often at a significant pay cut. Tying performance ratings to a bell curve because we have budget limitations makes no sense; it simply adds insult to injury.

We can’t afford to provide competitive financial motivation, and while everyone would like to earn what they’re worth, our staff literally comes here knowing they’re trading higher earning potential for otherwise meaningful work. Showing them that they are genuinely valued is more motivating than offering a 1-2% raise attached to an insincere review. Anecdotally, every single one of the conversations I had with upset employees last Spring was about them leaving purely because they didn’t feel valued. Not one person brought up any financial impact of their review.

If we continue to use this system, we will continue to prompt otherwise valued and retainable employees to look elsewhere – and continue to backfill those roles with much more expensive talent in the current market. I wouldn’t write to you if I didn’t feel this would directly hurt our organization. I would be happy to discuss further if you find it valuable.

Best,

Tis

UPDATE: I got a response, arguing in favor of that bell curve because the truth is most people ARE average performers, hence having an average at all. However, the Leadership Team will be discussing my points next week, so at least that. That said – here’s my response…

Hi [Leadership],
 
I appreciate the care and response. I look forward to hearing the outcome of those discussions. My one addition would be that, in every conversation I had with employees about their reviews last year, each went back to their job descriptions to understand what “meeting expectations” would have looked like, and argued that they were in fact acting well beyond the role they’d signed up for and were compensated for.
 
We know that our job descriptions are not adequately up to date for a huge portion of the org, and this is something we hope to tackle this year. With that in mind, most employees actually are going well beyond the call of duty for their particular roles (titles, job descriptions, and compensation).
 
I agree that the average workforce is, of course, average. I also agree that this is a tool for expectation setting. However, when our employees are being rated on a bell curve scale that doesn’t take into account the already outdated job descriptions, the system doesn’t make sense. We can’t tell employees who have expanded their responsibilities that they haven’t done exactly that, simply because there has been very real business need for them to do it.
 
Thank you again for the conversation. I hope you have a wonderful weekend, and of course, am more than happy to discuss this any time.
 
Best,
Tis

I believe we can do better, and it costs us nothing to be more honest with our staff. I never would have felt empowered or secure enough to voice these opinions in an email to our C-Level, but recently I discovered the privilege of that security at work and heck! If this is how I can try to use it, good. And if I do get blowback for it, at least I’ll go down swinging for something I feel very strongly about.

If this sparks anything in you, feel free to repurpose parts of these emails for your own organization. Either way, I hope more orgs can move away from these systems that literally only push good talent away and cost the business even more in the long run than any appropriate financial incentive could have. It’s a terrible strategy, and frankly, both the employees and the business deserve better.

OK. My rant is over. Happy 2022, everyone. May your Performance Review season suck a little less this year. Cheers!

ADDITIONAL UPDATE: I just heard back from our leadership team again and they are OFFICIALLY doing away with the damn bell curve! This feels. awesome. OK back to your regularly programmed cheers-ing!

Ditch Caps for Performance Reviews Pinterest

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