[emtel]

Formal performance reviews are the worst method for evaluating your workforce that has ever been tried, except for all the others.

For me, performance reviews are the single most demoralizing aspect of working at a large company. They are doubly demoralizing because I can see so many things wrong with them, but also can't imagine any system that would work better.

So what's wrong with them?

1. Over the long term, they incentivize people to work on things that have easily measurable short term costs and benefits. More difficult to measure costs and benefits get ignored. They also encourage sunk-cost fallacy. In almost any company, you're better off, at least in the short term, if you ship something that turns out to be a huge waste of resources later on, than if you make the decision "this isn't turning out the way we wanted, we should just cancel this project".

2. They pretend to be a relatively objective system, when in fact your performance rating at most companies is strongly (though not entirely) dependent on how your manager views you. Attempts to lessen the impact of point 1 above will generally increase the impact of this point. Research suggests that most of what passes for rational justifications are made up after the fact to support gut-level emotional decisions.

3. They replace intrinsic motivation with extrinsic motivation, which at least some research has shown can lead to much less durable motivation over the long run.

At one point I was very enamored of the way Valve does things, but now it seems that that sort of management approach produces super toxic cultures in the long run.

Ultimately it seems like the only way to get away from this stuff is to work for yourself or in a very small team with trusted partners.

[ryall]

Wholeheartedly agree. I ended up scrapping our company's PR document and rewrote it for my department.

Now it's more a performance review of the company and myself, and attempts to encourage my team to think about how we could improve the company. "What do you hate about your job? What do you like about your job? How could we apply some of the good points to other areas of the company?" Stuff like that.

If you're underperforming, I should already know (if I'm worthy of my position). And I definitely shouldn't be waiting a year to talk to you about it.

[snarf21]

I agree with what you are saying but I think performance reviews can be extremely valuable. The issue is that at all big companies they are used for promotions, raises and bonuses. They aren't designed to accurately measure or predict these things.

To me, the right kind of review (and done every six months) is something that takes an employee only an hour and the same for the manager. Its only purpose is to set and review goals specific to the function and success of the team(s) the employee is/was on. The scores are more like pass/fail or exceeds/meets/doesn't meet expectations. It gives a regular structured time for employee growth review and can help with correcting communication and other soft skills.

[SatvikBeri]

How do you decide promotions, raises, and bonuses then? I'd think of that as the main purpose of performance reviews.

[snarf21]

That's a fair question. I think reviews shouldn't be about performance but rather about employee growth. It is a touch base to make sure everyone is on the same page. It should also direct an employee in their career path. These are discussions that also lead to "Would you like to manage people or remain an individual contributor?" "Okay, to do that you need to improve your skills at X".

As far as bonuses, I think they should just be split regardless of performance. I think raises are tied to promotion but if it is CoL, then people just get it.

As far as promotions go, this should be a broader discussion with lot of ancillary group managers as well and should focus on "Has this individual contributed at a level above their current pay and role?" "Do we all think this individual can handle this new role/level and be effective?" "Do we need more people at this role/level?"

[johan_larson]

I've seen various performance management systems at eight different employers now. My conclusions:

1. Some feedback is useful. Sometimes it's hard to be sure how you're doing, particularly if you're not super-sensitive socially.

2. More is not better. Once a year is plenty.

3. It's mostly subjective. Trying to draw clear lines is probably a waste of time. A very experienced organization may be able to create some guidelines, but they should be guidelines, not rules.

4. In the end it's all about whether you are making the boss happy. The only reason to involve anyone other than you two in the process is when some of your work is genuinely out of view of the boss.

[dunkelheit]

Good summary. For me the triply demoralizing factor is that (at least where I work) performance reviews are hugely hypocritical. There are some officially stated rules but they don't describe what is actually happening. E.g. officially admitting that there is any kind of stack ranking is a big no-no, but there is now way a team leader can get away with "well, every one on my team has exceeded expectations this year, give them all raises". Or the term "exceeds expectations" itself - actual expectations of your boss play little role compared to the perceived importance of your work.

All of this is a kind of open secret, so the system is "fair" for some definition of fairness. Still, a novice will spend a couple of cycles to understand the unwritten rules of the game. At this point they will either start playing by the real rules or recoil in horror and suffer a blow to their motivation. Of course staying ignorant is also a possibility.

[megous]

I haven't worked for a corp yet, but wouldn't another problem be that you're a team/system, but perf. review is focussed on the individual, and assumes that's where the problems or the success of the team arises from? So it's a bit reductionist.

[eggpy]

Hopefully the manager of the team is also subject to performance reviews. Generally the manager of the team is responsible for the performance of the team, meaning the manager fails if the team fails or has significant problems.

This is highly dependent on company environment however and obviously can come with it's own set of motivations and problems.

[nradov]

Many organizations, especially larger ones, have a matrix structure in which project teams pull in resources who report to multiple different managers. So there may be a disconnect between the reporting manager and the team.

It's also just as difficult to evaluate team performance as individual performance. With knowledge workers everything is so subjective, and trying to put objective metrics on it ends up being self defeating due to people gaming the system in ways that harm the broader organization.

[mkobit]

I read about the culture of Valve a few years ago and it seemed interesting. What have you seen come out that changed your opinion?

[wpietri]

I would love to hear more than rumor about it, but what I've heard suggested a lot of "tyranny of structurelessness" [1] problems. If the former power structures go away, then people fall back on informal tools, including charm, popularity, favor-trading, and abusive behavior, and a de facto power structure emerges. Since this doesn't really include mechanisms for accountability, it can devolve into lord-of-the-flies scenarios.

[1] https://en.wikipedia.org/wiki/The_Tyranny_of_Structurelessne... and https://www.jofreeman.com/joreen/tyranny.htm

[emtel]

The most recent report about this is https://www.pcgamer.com/ex-valve-employee-describes-ruthless... - this is maybe only one step above rumor, but most of what I've heard through the grapevine matches this. Basically super cliquey and horrible unless you are one of the cool kids.

[walshemj]

No all PMS systems are worse that say giving every one the same pay rise even a lottery would cause less disruption.

[muro]

Lotteries were tried, they are the worst system possible.

[walshemj]

Got any case studies you would care to share with the class

[muro]

This one is famous:

https://www.google.ch/amp/s/www.cnbc.com/amp/2018/03/05/unit...