Why annual reviews must go

Is this past-century tradition worth keeping?

Oh, December. ‘Tis the season to be merry, jolly, and to reflect back on the year. ‘Tis also the season of the notorious end-of-year reviews. Which, come to think of it, makes the season a little less jolly.

Hate them or love them, performance reviews are here to stay. We are, after all, a species obsessed with measuring and capturing every little crumb we produce. But that doesn’t mean they can’t and shouldn’t be challenged.

I’ve always had mixed feelings about annual reviews. On one hand, they offer a great opportunity to connect with colleagues, reflect back on a year’s worth of work, and discuss career prospects. On the other hand, I can’t help but think of all the biases that manage to conceal themselves as objective feedback, leaving significant marks on our self-worth.

Most of us are socialized to believe that feedback, especially in the context of work, is something that needs to be graciously accepted. Especially if it’s coming from leadership. But I don’t subscribe to that belief. I think one shouldn’t accept anything that doesn’t feel right to them or leaves them feeling powerless or disempowered. So I decided to poke holes in this century-old practice.

The ghost of reviews past

Whenever I’m questioning the effectiveness of something I like to take a quick look at its origins. After a quick Google search, I discovered that like many other corporate rituals, annual reviews, and performance reviews at large, are inherited relics of the industrial revolution and military practices. Created in the early 1900s, they were originally designed and put to practice to contain and control human capital. Which at that moment in time was plentiful and expandable. The rationale was simple and inspired by industrial thinking. If we can measure the productivity of machines then surely we can apply that same logic to humans.

After the wars ended, however, this practice lingered. Alongside other questionable innovations like canned meats and powdered beverages. By the early 1960s, performance documentation and reviews were being used by almost 90% of U.S. companies. In other words, they were standardized. The upside is that they were redesigned to focus on growth and actualization. The downside is that it didn’t take long for them to become instruments of control when inflation came knocking in the 1970s. You can read more about the fascinating history of performance management here.

The ghost of reviews present

A lot has changed since performance reviews were first put in motion. For instance, human capital is in great shortage where it’s most needed. Our focus has shifted from physical labor to knowledge work, the output of which is much more difficult to measure and control. We are also coming to terms with the fact that we can’t isolate an individual from a system when measuring anything. In other words, it’s unfair to hold an individual accountable for their own performance without looking at their team, their department, the organization as a whole, and the state of the industry and economy at large.

To accommodate the changing times and emerging research, many companies have been reinventing their performance documentation. Some major firms have replaced their annual reviews with frequent informal check-ins between managers and employees. Others no longer assign one hard number for annual performance and instead rely on an array of metrics. And the general discourse around performance has shifted from accountability (how have you been adding value to our organization?) to development (how can our organization empower you so you can add the most value?).

But good intentions, ideological changes, and economical developments aside, it takes time to shift mindsets and behaviors altogether. Somewhere deep in our subconscious, we’re still operating on beliefs and principles from the previous century. So can we really be confident that we’re making better decisions now than the ones we’ve made on factory floors in the 1900s?

We have a terribly flawed memory

So let’s start with the most pressing question. A year is a very long time, how realistic is it to rely on memory to capture performance? The answer is simple, not realistic at all. Here is why.

The peak-end rule is a psychological bias that interferes with how we remember things. We have the tendency to judge experiences based on how they felt at peak moments, especially if something significant happened right before the end. A lot of interesting studies have been designed to capture this heuristic. But perhaps the most famous one is Kahneman’s study on colonoscopies. Where he discovered that patients preferred spending more time enduring a bit more pain over having a shorter session where pain peaked at the end and then ended abruptly. They rated the latter shorter experience as more painful, even though the amount of pain in the longer session was overall higher.

Although I hope your work is not as painful as colonoscopies in the 1990s, when reflecting back on a year’s worth of work, interactions, and projects, your mind will most likely surface peak moments. It’s also likely that you will magnify whatever happened in the last couple of months. This also applies to whoever is giving you feedback. They’re less likely to remember minor details or what you did last January, even though that information could be instrumental to your career advancement.

Maybe you got unlucky with leading a certain high-profile project. But you also contributed greatly on a micro-level and kept a great tracking record. You’ve created daily psychological safety around you which empowered others to be their best selves. You’d shed light on difficult topics that no one else dared to bring up. Maybe you’ve pivoted when necessary, and chose the well-being of your peers over maintaining a good image. In other words, you’ve displayed great leadership skills. But that one particular project can still be used to justify why you’re not getting promoted to a leadership position. Even if the entire situation was completely out of your hands. Availability bias might also be at play here, making certain information about your performance more readily available to people.

And you too might fail to see the bigger picture when reviewing your own performance. It’s possible that it won’t even occur to you to push back because you’re also thinking in peaks. On the other hand, it’s possible that you have over-performed on one particular project, and are now feeling entitled to a raise or a promotion that you won’t be getting.

Career development is much more nuanced than big losses and wins, but our memory and remembering self don’t know how to capture nuances objectively. With everything we know about human memory, we might want to reconsider measuring a year worth of performance in one go.

We judge people not performance

Another question that might be on your mind is this: How come certain people get more attention and praise than others? Even when their performance is slightly, if at all, above average? And how about high performers who don’t get recognition where it’s due? Unfortunately, praise can’t always be attributed to merit. Sometimes, it’s coming from an unconscious place. And I’m not talking about nepotism and favoritism.

As early as the 1920s, American psychologist Edward Thorndike noticed that ‘conventionally attractive’ individuals were perceived as more competent and successful. Their poor communication skills, for example, were completely overshadowed by their appearance. He coined it as the halo effect. On the other hand, the horn effect, also coined by Edward Thorndike, immediately assigns negative attitudes or behaviors to someone based on their appearance or character. A common example of this is how overweight people often get stereotyped as being lazy or irresponsible.

Whether it’s how someone speaks, dresses, or even their body language, we can quickly develop a ‘bad’ or ‘good’ feeling about them and then fail to disconnect that feeling from their performance and ability. The halo effect can lead to unfair special treatment in reviews. A manager who has an overly positive view of an employee can have a hard time evaluating their work objectively. They can turn a blind eye to criticism from colleagues and unconsciously overlook bad practices. In contrast, a manager who is managing an ill-favored employee can fail to put them forward for new development opportunities, stumping their growth and potential in the process.

Minorities, people of color, and women are particularly vulnerable to performance-related bias. For example, in most cultures, women are socialized to be likable, kind, and modest. While we are socialized to attach these qualities to their overall attractiveness. Meanwhile, corporate culture remains predominantly white and male. It rewards competitiveness, assertiveness, and self-importance. But a high-performing female employee displaying these qualities might be perceived as unattractive and unlikeable, which can damage her career prospects. At the same time, a lack of assertiveness or brute force on her behalf might also be perceived as a lack of initiative. It’s a zero-sum game which we’ve managed to rationalize as imposter syndrome.

It is also important to note that what is perceived as attractive and desirable by one culture can have the opposite effect on another. Imagine evaluating the performance of someone from a culture that considers speaking over others disrespectful. In your culture, however, bulldozing through conversation is considered admirable. So you can’t help but think of their quietness as unattractive, especially if they’re being considered for a leadership position. And maybe you’ve gone through unconscious bias training and culture mapping exercises with your team. You might even consider yourself anti-racist, anti-sexist, whatever. But if you operate in a diverse team and don’t actively de-bias your feedback, then there’s no guarantee that you’re being objective.

We can’t afford entire teams of high performers

So, we’ve established that our memory is an unreliable source of information. We’ve also established that we are not in control of what we find attractive or unattractive in other people. Great. Now let’s zoom out for a minute and consider the goal of performance reviews at large. And let me state that we’re now entering the waters of theory. I might not be able to prove any of this. But it rings true.

From an early age, we are conditioned to operate within certain norms and guidelines. First at home, where we are socialized to behave in certain normative ways, which greatly depend on our culture and what it establishes as ‘normal’ for us. Then school starts, another byproduct of industrial society, where we get constantly stirred back into behaving and thinking within rigid guidelines. College offers a small window for free-thinking, but then most of us get thrown into one corporate culture or another. We are then told to bring our best selves to work, that our best performance will not go unrewarded, but is that really true?

First of all, by then most of us will be disconnected from our natural talents, abilities, and intuitions after decades of ‘taming’. So can we truly bring our true selves to work when we haven’t even met them? Second of all, the survival of a culture depends on its individuals’ compliance with the rules that it has created. So even if you bring your full authentic and best self, there is no guarantee that it will be appreciated or accepted if it doesn’t serve the existing culture. In that situation, most of us will choose conformity over ostracization.

And lastly, no one wants an entire team of free thinkers and leaders. That will be too disruptive and entirely non-economical. Very few companies can afford to promote and reward each individual on every team annually, no matter how amazing their performance might be. So from a completely practical perspective, most companies are asking for something that they can’t afford, neither economically nor culturally. In reality, they want just enough high performers to maintain their reputation as a successful establishment.

Now, what happens when a company meets its requirement for high performers? My theory is that they fall back on their unconscious bias to justify keeping people behind, or to rationalize their employee attrition. And the people who have to endure the fall are either the unlucky or the ones most vulnerable to the biases of others.

The ghost of reviews future

I want to live in a world where we’re not constantly obsessing over performance metrics and hard numbers. But I know I’m being idealistic, so I would like to propose a middle ground. A world where, one, those metrics and numbers are the outcome of a better process, and two, where we don’t rely on exterior metrics or praise to own what we have accomplished.

If you’re a decision-maker and this article has made you feel uncomfortable somehow, then great. I hope it will inspire you to redesign your process. You don’t have to overhaul your entire process, start small. Schedule more frequent check-ins to capture fresh impressions. Don’t wait till the middle or the end of the year where you and your team have to rely on vague feelings and memories. Offer small rewards and praise on the spot to keep people motivated throughout the entire year. Studies have shown that a top reason employees leave is lack of recognition. It’s also important to mention that recognition doesn’t have to be big or expensive. And most importantly, be honest and upfront about cognitive bias. Challenge yourself and your entire team to take their biases into consideration when sharing and receiving feedback.

If you’re not a decision-maker and this article made you realize that your work isn’t being valued enough, or that it’s not being reviewed objectively, then you can be the trailblazer. You can start the uncomfortable conversation around bias and process, or poke holes in your company’s process. And if you don’t feel safe doing that, or your organization is extremely hierarchal or is too big for bottom-up change, you can still work on disconnecting your feelings of self-worth from the numbers that have been assigned to you. And when it comes to bias, you can also challenge your own. For example, capture your performance and progress at the end of each month to keep an eye on your growth, and to contrast it against the feedback of others.

I realize that all of this is easier said than done. We live in a world obsessed with virtue signaling, success, and growth. But if your feelings of success are attached to something outside of you then you’re always gambling with your worth. You’re allowing your value and hard work to belong to other people, not you. The best way to dismantle something is to stop believing in it, to no longer allow it to have any power over you, and to find that power within you instead.