Friday, February 3, 2012

Agile Performance Management: Why Performance Reviews Suck

What People Actually Hear in a Performance Review

Many thanks to Mary Poppendieck, who wrote about this topic in 2004, and proposed a comprehensive solution.  She is the inspiration for much of my thinking on this subject.  She is also a better writer than I am a cartoonist.

Performance reviews suck.  I don't know of anyone who goes into their appraisal without some trepidation.  Your boss is guaranteed spring some surprise criticism on you that is ill-informed or misses the point as you see it.  It's a real challenge not to get defensive about that.

The only thing that makes your own performance review suck less is having to give them.  As a manager, I have dished out quite a few, and some of them went pretty badly.  (To the people at my first management job: Thanks for helping me learn how to get better at them.  Your sacrifice was not in vain.)  Since then, receiving one isn't nearly as gut-wrenching, if only because I try to make it easier for the guy on the other side of the desk.  I've been there, and I know how clueless I feel trying to evaluate someone who is at least as smart as I am.

So, why do reviews suck?

  • You usually get a year's worth of "constructive feedback" in an hour or less.
  • "Mixing the good with the bad" makes it hard appreciate the positive things you've done.
  • The purpose of the review is to explain why you're not getting a large raise.

This last point is important.  I have never worked for a company that dishes out large raises based on a performance review.  Sure, you can get 1-2% more than the other people on your team if you really kicked ass, but the pie is just too small to give you much more.  Real compensation bumps come from bonuses or promotions.

Performance evaluations are counterproductive
It gets worse if you're managing an agile team.  "Agile" is all about team performance.  Evaluating individual performance lies somewhere between "very difficult" and "you're sure to get it wrong".  In fact, effectively evaluating individual performance is counterproductive, and can actually make the team worse.

Why?  Let's compare individual and team performance first.

Outstanding individual performance is very different from outstanding team performance.  More to the point, individual performance - by the kind of metrics we usually use, is much less valuable than team performance.  Consider that a strong "team" contributor might constantly enable others to get work done - cleaning up a backlog, helping teammates fix broken builds, working with a product manager to eliminate low-value storie, etc.  Such behavior might add quite a lot of velocity to a team and provide a regular morale boost ("we're really moving fast!"), but it is almost impossible to measure for an individual.

On the other hand, it's pretty easy to tell if a team is performing at a high level.  Is the product owner happy?  Are they getting things done as fast or faster than expected?  Are the customers happy?  Do you feel the velocity in the team room when you spend time in there?

So how does measuring individual performance hurt team performance?  By fostering competition.

When you ask people within a team to compete with each other for their share of the pie, you're asking them to make themselves look good at the expense of their teammates.

Think about it.  Using traditional evaluations, you don't get the biggest raise by helping your teammates the most.  You get the biggest raise by convincing your manager that you add more value than the other people in the room.

Fortunately, your efforts are wasted.
Luckily, an annual review happens too seldom to have any impact.  Until I started managing people, I thought I was the only dummy who consistently forgot to look at his goals throughout the year.  Nope.  I doubt that anyone on my team has an IQ under 120, and none of them do it, either.

If someone gets a good review, they walk away thinking, "Whew!  I'm glad the stuff I did matched up with my goals, since I haven't looked at them since last year."  If they get a bad review, it's "Screw this place and my next raise.  I'll find another job by this time next year."  (They think this even if they accept the review with apparent good grace.  Watch their performance a while and tell me I'm wrong.)

So.  Either your efforts are neutral, or they have a negative effect.  That sucks if you've been spending days and days of your time gathering feedback, and obsessing over the precise wording on the review form.  Sorry.

Bullshit, my team is doing great!
What's that you say?  You are a good manager?  You have a high performing team, and you deserve some credit for that?

You're probably right.  It just has nothing to do with performance evaluations.

If you have a capable, hardworking team, it probably is due (at least in part) to your efforts.  But they're not doing great because of your evaluations:

They're smart because you hired well.  They're all pulling in the same direction because you've shown them some leadership. They're thinking for themselves because you get out of their way.  They're telling you about problems early because they know you care about them, and they want to reciprocate by making your job easier.

So relax.  You did great.  Have a cigar.

Managing Losers
The manager of a traditional team is focused on extracting as much work as they can from a bunch of losers who aren't in the same league as the manager.  You disagree?  Read Mary's article and take another look at your what "performance management" really does, compared to what it is supposed to do.  The entire process was designed in an age of command-and-control management, when the boss was always right.

I'm not accusing you of treating your people like losers.  I'm saying that reviews motivate people to do just enough to not get fired, or have no effect at all.  If your team is going above and beyond, it's because you're doing something else right.

So what's the answer?
The short answer is "Do what Mary says."  To help you decide whether to read her article or not, here are the "Cliff's notes" from what I saw in it:

  • Eliminate the annual performance raise.
  • Give a small annual cost-of-living raise.
  • Create finer-grained job titles and salary bands.
  • Reward teams frequently.  It doesn't need to be money (in fact, it probably shouldn't be money).

I like her advice, and I think it's workable.  Unfortunately, I haven't found a single case study showing that it works after a whole five minutes of searching Google.  (OK, maybe it was a little bit longer than that.)  I also don't think I can sell it to my HR department any more than you can sell it to yours.

The best way to deal with the problem is will be with a transitional / hybrid approach of some sort.  I'll be sure to post that approach when I find one that works consistently.