The Psychology of Performance Reviews

Performance appraisals are probably the most disliked and dreaded tasks that a manager has to perform. Employees look forward to performance appraisals about as much as they do having a root canal – and at least with a root canal the patient is given anesthetic to lessen the pain while undergoing the procedure. On top of this of this, many studies show that the annual appraisal has no impact on performance.

Human resource managers will argue that documenting performance is necessary to protect the company against potential lawsuits if an employee has to be terminated. In reality, because of the way that most appraisals are done, they most often work against the company in litigation. I have seen many cases where a company was ready to terminate an employee for poor performance only to find that there was a history of satisfactory ratings on prior reviews. So I tend to discount this as a reason to do annual reviews, and therefore think they should exclusively be a tool to improve individual and organization performance.

To make reviews an effective tool for improving performance, we need to understand and apply some basic principles of psychology. People are internally driven to do the best that they can be based on their perception and understanding of what is expected. These expectations reside in the subconscious mind and are influenced by what the person has experienced. The subconscious cannot deal in abstract concepts. So reviews need to focus on specific, concrete actions and behaviors that influence either positive or negative performance. While measuring key factors associated with performance is absolutely essential to running a business, focusing on numbers is a fruitless activity when it comes to improving individual performance.

Our actions are primarily driven by the subconscious. The subconscious mind will work to achieve anything that it can visualize. I have written on the subject of using term “Meets Expectations” as an indicator of average or mediocre performance before. If we tell people exactly what is expected of them, then the subconscious goes to work to make it happen. If managers want people to exceed expectations, then they need to help the employee visualize what this really means. If there is one thing that organizations can do to improve performance across the board, it is to increase expectations. In my performance appraisal system, “Meets All Expectations” is the highest rating that someone can get. It puts the responsibility for getting exceptional performance on the shoulders of the manager to clearly define it, rather than on the poor employee who has to try to figure out what it means.

According to brain science, each person is “wired” based on his or her life experiences. Each of us sees the world and events through our own unique belief window. Managers tend to see things one way while employees see it another way. Part of this wiring process, is the need for each of us to have a positive self image that is essential to our physical and emotional well being. Any feedback that we get that creates a conflict with our positive self image creates discomfort which psychologist call cognitive dissonance. We naturally do anything we can to reduce the dissonance. This includes rationalizing, blaming others, or discounting the source of the feedback.

So when a mangers says something like, “I want to give you some feedback to help you improve”, the employee thinks “this is an opportunity for the manager to blame me for things I couldn’t control”.

The way to overcome cognitive dissonance is for the manager to ask rather than tell. Have the employees evaluated their own performance. The manager asks questions to clarify what is being said. I was fortunate to work for a manager who allowed us to write our performance reviews. As we reviewed what I wrote, he was really skilled at asking great questions that made me really thing about my performance, yet I didn’t feel like he was judging or evaluating me.

The same principle applies when setting goals. When employees develop their own objectives, cognitive dissonance disappears. If a manager says “Here are your goals for the year”, the employee immediately thinks “How can anyone be expected to do all that”. Instead of going to work on the goal, the subconscious focuses on the path of least resistance which is rationalization, blame, or indifference.

Two other quick “rules” about performance reviews. First, salary should never be incorporated into the performance discussion. If salary is discussed during the review session, the mind will block out everything else. Second, the primary focus of the review process is now and the future, not the past. Nothing can be done about the past – it’s over and time to move on. To be most effective in modifying behavior, praise and criticism must occur at the time of the event, not weeks or months afterwards in a performance review session.

Ryan Scholz works with leaders whose success is dependent on getting commitment and high performance from others. He is author of Turning Potential into Action: Eight Principles for Creating a Highly Engaged Work Place. For more information, visit his web site at

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