Posted by: A.R. Cherian | October 1, 2009

Performance Reviews and systemic problems

Related to my previous post on the downsides of performance reviews, is a recent Harvard Business School case study I read about a company whose newly-hired CEO asked an outside consultant to evaluate the top management team to see why they were all not on the same page. The consultant (a Phd in psychology) interviewed and tested all VP’s and the CEO and make her subjective assessment as to their personality characteristics and fit with other executive team members. It was an interesting read.

The CEO had observed some interesting things in the meetings and when reviewing the background of the executive team members:

  • Elaborate performance review process in place but everyone on the team consistently given high ratings and being paid at the highest end of the range for their job grade
  • Reluctance to comment on other functional areas or each others areas of responsibility

Some of the interesting findings of the consultant:

  • Team entrenched in functional silos with limited and protective sharing of information
  • Power jockeying in subtle and not so subtle ways
  • CEO seems uncomfortable dealing with age and tenure issues of his staff

I think this case is a classic case of what can happen when performance reviews are used religiously to determine pay and promotion. Even though all these execs received great reviews throughout the years (most likely leading to their upward advancement in the company), they were unable to function as a cohesive team with the new CEO and was reluctant to discuss the problems with him. This may have culminated from a history of not mentioning problems to their immediate supervisor for fear of bad performance reviews.

One thing about the idea to hire the consultant. Many times business consultants are brought in for a expertise that we lack. That is not a bad thing. However, consultants are often brought in to be a one-stop solution and a quick fix many times. The consultant in this case mainly just confirmed the assumptions and plan of the attack that the CEO had all along.

This case highlighted a problem that UCLA management professor Samuel A. Culbert mentioned in his opinion piece on getting rid of performance evaluations – the hiding of problems and working to “please the boss” only instead of both manager and employee working collaboratively to fix systemic problems.

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