Annual Review Nightmares

I could probably write an entire post just about the mistakes I’ve seen managers make in trying to review me. Well, actually, I could probably write a book about those errors, and maybe someday I will. The fact is, you can learn a lot about an organization just by examining its annual review process. In particular, you can learn which mistakes are being made because the management team doesn’t know any better, and which ones are being made because the organization’s entire structure is rotting…

All too often, management personnel regard these reviews as a useless drain on their time, and put as little effort into them as possible. They don’t keep track of the employees’ performance, make no note of their subordinates’ accomplishments, and conduct annual reviews only because their own superiors require them to do so. In fact, on one job I did not receive a review for nearly 30 months – and then got one only because the company was being sued, and had been required to produce their internal records. I’ve even seen cases of managers having subordinates write their own reviews, and then signing them and putting them in permanent files still unread.

I’m not sure “management apathy” is actually a term. But I’ve watched it kill any number of otherwise worthwhile organizations, and this is a clear case of it.

Then we have inappropriate rating systems. On one past job, our division President decreed that since no one is perfect, no one could receive a “5” on the 1 to 5 performance scale on their review. Most of the division’s managers interpreted this to mean that no one could receive a “5” ranking on any part of the review. Since our review had 20 ranking questions, this made the highest possible score an 80, although it was still alleged to be 100. Even worse, these rankings determined the size of your annual raise; so while there was a percentage given for those who got a “5”, no one EVER received that amount.

Then we have the raises themselves. In the company I just mentioned, a “5” meant that you got a 3% raise; a “4” meant that you got a 2% raise; a “3” meant 1%, a “2” meant that you did not get a salary increase, and a “1” meant you were fired. Leaving aside for the moment the fact that no one ever got a “5” and very few people ever saw a “4”, this practice is stupid for at least two other reasons. First, the low salary increase completely ignores the employees’ level 4 (Recognition) needs and may actually ignore their level 1 (Survival) needs as well, if the increase is lower than the prevailing rate of inflation. Even worse, however, is the fact that you can not discipline someone by threatening to withhold their raise if you are not giving them one in the first place. “Behave, or you won’t get your 1%!” is just not effective.

Finally, there was the case of management telling us that there would be no raises this year because it had been a difficult year for the company, financially. Unfortunately, every employee in this company was also a stockholder, since we received stock as part of the retirement plan, which meant that every one of us had received a letter three weeks earlier bragging that the company was having its best year ever and would be paying record dividends. I stapled together the stockholder letter, the memo from senior management saying they couldn’t afford to give raises, and the Dilbert cartoon where exactly the same thing happens, and gave it to my boss at my annual review that year, right after he told me I was getting 1%. It probably didn’t help… But then it’s hard to imagine that anything would have at that point.