The Elusive Stellar Performance Review

Here’s an office-world dynamic that annoys many managers and employees. Employees in most companies get a “performance review”, an annual review of how well they’re doing. Of course, they want their reviews to say they absolutely sparkle. This expectation is bound to disappoint. The average person is…well…average. Even though this person is of course very qualified and was selected out of a pool of many qualified employees, there is bound to be a distribution of “employee quality” with most aggregating around some average value. The “selected from a pool of candidates” filter isn’t going to change the fundamental fact that average is average.

Still, performance reviews tend to be average more often than the statistics of distributions would predict. There’s a selection effect at work. Bad employees get fired or moved to a role more suited to their abilities. Good employees tend to get promoted, and with the promotion comes an inflation of expectations. An employee with stellar performance reviews year after year is an employee who is being held back. Even a pay increase with no nominal change in job description could inflate the expectations of that employee, thus holding down his/her performance reviews. "Yes, you kick ass at your job. If we paid you what we paid your co-workers, you'd get a stellar review this year! With higher pay comes higher expectations." 

I was talking to someone about this recently who gave a mediocre performance review, and the recipient was very upset by it. I was reminded of someone at work who explained the dynamic (described above) to me, years ago. Beginning employees tend to get average reviews, because they haven’t had a chance to shine yet. Employees who shine get placed in a position where the expectations are higher, so once again can expect an average performance review given the expectations. Sorry, but we can’t all live in Lake Wobegone where “all the children are above average.”

A contrary thought occurs to me. A company could probably make their employees happier by making this simple concession of “grade inflation.” But then perhaps that would be costly in the long run, because it might be hard to fire employees with consistent “above average” performance? (According to the official record!) It might even open up the company to lawsuits if it starts massive layoffs of its “above  average” work force. Have some company’s bitten this bullet and adopted a policy of giving above average performance reviews? I'm not sure, but I suspect my experience is somewhat typical.