Performance reviews aim to assess employee performance. This data has a major impact on promotions and salary increases. This is about status and income, two of the most important motivating factors for employees. As such, they have a massive impact on employee behavior.
“We have lost our way but are making good progress”
But, what does personal achievement mean anyway? Is it good if a person is running full steam ahead in the wrong direction or spinning in circles? Or, what about managers who drive their employees to burnout due to pressure and constant stress, but thus outwardly achieve a good team performance.
In today’s companies, individual performance is usually measured by the achievement of previously agreed goals. However, deriving individual performance from target achievement is also problematic:
- The achievement of goals depends on many factors, and thus also on the performance of many people involved. This makes it difficult to evaluate individuals and there is always an excuse why the goal was not achievable.
- Individual “local” goals are more likely to be achieved if other factors are deliberately neglected. In reality, however, it is usually a matter of striking a balance between several goals.
- For example, sales can be increased in the short term by selling the product below the production price, i.e. by generating a loss.
- Profit can be increased in the short term by producing at a lower price and below the quality standard. In the long term, this is a bad strategy.
- Likewise, sales and profits can be significantly increased in one market segment if the entire advertising budget is invested in this one market segment.
“Performance assessment is tightly linked to the Finite Game (short term winning). The Infinite Game (long term success) requires a switch to behavioral assessment”
What we can evaluate for each individual person is their behavior. Unfortunately, the measurement criteria for this are not quite so easy to define and collect.
Very good results are produced by organizations that determine the behavior of employees and managers through 360° feedback, i.e. by interviewing people in their environment. It is important that, in addition to the managers of the person being evaluated, the “peers” at the same level are also surveyed, as are the employees “below” them. Particularly in middle management, this encourages behavior that promotes both the big picture and the needs of the employees.
Read more about goals and performance evaluations in the article “Every year: goal agreements and employee evaluations“.
You can find more information about Finite Game and Infinte Game from Simon Sinek.
Title photo from Marten Newhall on unsplash.com