The most powerful statement in business is …

Making Performance Reviews Powerful

“I have a chance to see my strengths every day.”

Now let me explain why.

This is a really long, but really good article from Harvard Business Review on the general idea of performance management — and specifically how Deloitte is trying to reinvent theirs. If you’re interested in those kinds of topics, I suggest you read the entire thing. It’s definitely worth it.

I’m definitely interested in them, although in kind of an awkward, roundabout way. I went to graduate school in Minneapolis because I was interested in ideas like motivation, management, leadership, and accountability. Within a few months, I realized that caring about those things were “soft skills” (not money-linked) that gets you grouped with HR. As a result, it took me forever to find a job and I ultimately ended up in a marketing role. I don’t do as much (or anything really) with performance management and/or employee engagement, but I still have some thoughts on the concept: see here, here and here.

My big idea on this topic is this: when we deal with customers/clients, rapid response is everything. If someone tweets a negative thing at your company, you probably have hired someone to course-correct that immediately. Right? So with the external world, you’re always on the go and responding to what crops up.

What happens with performance reviews, though? They tend to happen once a year (if that), and they tend to end up with some type of rating (“A 4!”) and maybe some extra cash. Good, but once-a-year is hardly a relevant analysis of a person. You evaluate Joe Blow The Customer From Wisconsin once a second if he’s part of “lead gen.”

Alright, so … the whole idea is stupid. And if you’ve ever worked at a company that does performance reviews, you know everyone bitches for weeks before and after them. “This again? Didn’t we just do this?” Etc. It’s all brutal.

Here’s the first interesting part of the Harvard article from Deloitte:

The most comprehensive research on what ratings actually measure was conducted by Michael Mount, Steven Scullen, and Maynard Goff and published in the Journal of Applied Psychology in 2000. Their study—in which 4,492 managers were rated on certain performance dimensions by two bosses, two peers, and two subordinates—revealed that 62% of the variance in the ratings could be accounted for by individual raters’ peculiarities of perception. Actual performance accounted for only 21% of the variance.

Check that out: variance in ratings is 3x more likely to be from individual raters’ perception than actual performance. Right there, off that research — even if you abhor the idea of research — you should realize performance reviews are a crap-hole.

Here’s the second interesting part:

We set out to see whether those results held at Deloitte. First we identified 60 high-performing teams, which involved 1,287 employees and represented all parts of the organization. For the control group, we chose a representative sample of 1,954 employees. To measure the conditions within a team, we employed a six-item survey. When the results were in and tallied, three items correlated best with high performance for a team: “My coworkers are committed to doing quality work,” “The mission of our company inspires me,” and “I have the chance to use my strengths every day.” Of these, the third was the most powerful across the organization.

Look at the bottom.

The most powerful statement associated high-performing teams is “I have the chance to use my strengths every day.”

Now consider this: if you change the on-boarding process for an employee (first days of work) to simply include the question “Who Are You When You’re Your Best Self?”, their performance can skyrocket.

So again, we come to this place where leadership is some major thing that everyone chases and people fly around the world defining and all that, but it’s actually fairly simple: people have strengths and beliefs about themselves, and they want to use those strengths and build them up. That’s what is important to them. That’s how you maximize when you manage and evaluate.

Now of course, there are problems here too: some studies indicate only 34 percent of managers can even ID the strengths of their direct reports, and some other studies show that 60 percent of managers don’t believe they have the time to respect their employees.

So we’re facing an uphill battle here, yes — the core tenet of leadership and management is actually finding a way to consistently bring out the strengths of your people, but most managers don’t know what those strengths are and feel pressed for time by other deliverables. That’s a concern. That’s a major fucking concern.

There are six million different ideas about leadership, and I doubt anyone would even classify me as a leader, so I won’t toss mine in here or anything. But stop and think for just one second about how basic this is: if you want a high-performing team, let them use and develop their strengths. In that way, you’re more “a coach” than “a manager.” It’s not that hard, right?



Ted Bauer

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