If you run a company you know this, but for the uninitiated: there’s a lot of work to fire someone in the US. Technically most employees are at-will, however companies need to have non-sueable reasons for terminating employment.
If they fire you because of race, sex, or some other protected class, that’s illegal. The employee can file for unemployment and that makes your company’s rates go up.
So before terminating someone, companies get a lot of written paperwork in order. This is typically called a performance improvement plan (PIP). That usually starts at the Annual performance review - they’ll say you have poor performance in specific areas and write it down in traceable documents.
The employee tries to “improve” sometimes, but if the company is adamant on terminating someone it’s really just a matter of time.
Their goal is to have a strong case (aka paperwork) demonstrating poor job performance so that when you sue (or file for unemployment) they can push back with a 6 month history of documented issues.
The first is best done by peers & management anonymously, the second by a fairly objective public rubric and the last is purely market driven (no matter how much companies wish it weren’t).
Collecting all the information the same way and using the data collected cross purpose leads to all of them being done poorly.
> drew a straight line between here's what you need to do to get this much of a raise or this much of a bonus
This is really really hard to do. It's not a good idea (or even a practical idea) to plot out all the work that you want an employee to do in a year, or even in a quarter.
You can prove this to yourself. Try and write down all the things you would like to get done over the next year and how much of a bonus you think you should earn for each thing. If you're in sales this is easy - it's a sliding scale ratio between revenue won and bonus. If you're in product or engineering I suspect you will not find it so simple.
If you've read posts like "Being Glue" (https://noidea.dog/glue), they talk the importance of work that's impactful within the team but very difficult to measure. If companies tried to draw a straight line between visible work and raise/bonus, nobody would ever choose to be glue.
This isn't to say that everyone is happy with how annual reviews work. As engineers we want everything to be black and white. If I pass this unit test, I get a pay rise. As managers who used to be engineers, we'd love to be able to give engineers that clarity, because you're right, they would get hyperfocused on it and we'd get a lot more out of them. But nobody's worked out a way to make it work.
Believe me: if you can invent a technique (and make a product around it) that enables this, you'll make a lot of money selling it to every single software company.
The assumption is they'll get more effort out of labor if they're uncertain about the outcome. No matter how valuable an employee is the company must always maintain a MAD type posture that no employee is too valuable to lose, because if that were true and the employees knew they would take the company over effectively.
Part of what the annual review is is a reminder that your job is not an entitlement. It is not supposed to be pleasant for the average worker.
Here's an easy example. If you were going to get rid of someone in 4 months after their review, would you give them a raise? Of course not, you'd allocate that funds to someone else.
That's why it's hard. The business has to judge which people they are going to focus on keeping.
Because they can get more out of the high-performers by not giving them a clear threshold (which is why they are called 'over-achievers') and if the mid to low performers met the threshold then the company would have to pay out a lot more in salary.
Some people want it straight, do this and get this, but we have gone to a way more mild approach where it's no longer an 'annual review' but more a 'wellbeing meeting' because some people didn't like the format and felt that they didn't want to sit and listen to being critised and that the metrics were unfair or not applicable to them.
So now what we have is much worse, last year, 30% of the team got a pay rise as is company policy, however we do not know how this was dedicated and most of us have barely spoken to those that do as our direct line manager was not involved in the decision.
Personally I hate them, I just want to be left alone.
Instead it should be a conversation around the two way relationship where both sides at least have the power to exit the relationship. Both sides should approach it as a conversation about the relationship and things that work / don't work from both sides.
A normal interview these days is 38 minutes (45 minutes minus 2 minutes introductions and 5 minutes for interviewee questions at the end), times 5 or 6.
Some leetcode, some Jedi (cultural fit), a design sketching or 2. People just go hard on leetcode, grokking system design, and memorize a few situational answers in STAR format and they're good to go.
How good will they be at identifying why the Kafka consumer is lagging at midnight? Who the hell knows?
So a broken system brings in thousands of new employees, now you need to define success to all of them at the same time, and figure out how fast you can get rid of those who can master leetcode but not deliverable production quality code
If we could predict exactly what work needed to be done and how long it would take a theoretical employee to do it, this would be great.
But we can’t predict the work with such accuracy, nor can we predict how long it should take to get done. If we planned all of the year’s work in exact detail and underestimated by even 25%, you’d be working 10 hour days every day for a year. It’s not uncommon for projects to take twice as long as estimated, in which case you’d be working 80 hour weeks.
Another problem is that once you set specific numeric goals, people will game the hell out of them. I worked at a company that decided to reward people by the number of bug tickets they closed. Suddenly, the number of bug tickets tripled! People were starting to ship code with known bugs because they knew they could get some easy bug fix ticket closes to raise their numbers. It made outcomes worse even though everyone now knew exactly how to get bigger bonuses.
Finally, there’s more to reviews than just the things that can be measured through metrics. If someone is crushing their tickets and committing a lot of features but they’re insufferable to work with, they shouldn’t be rewarded for that. Good managers should have their finger on the pulse of these softer aspects of performance, even though it will never be a perfect assessment.
In sales it’s fairly simple to set clear goals that can be evaluated in the review. I think for a lot of other people goals constantly change during the year. It’s hard to evaluate that. It could maybe work if management constantly gave you clear and achievable goals for the month but that would require a lot of effort by management.
In the end annual reviews are BS for most people. “Nice job last year. Keep sound what you did. We don’t have money for raises.”.
It’s the result of a low trust society. Yay.
1. I really like 360 reviews, where you get feedback (anonymously) from other members of the team and even outside of the team. It's some work to do, but it can be worth it. 2. My company does semi-annual reviews, because 6 months is about the time people can remember things. That works well, and also because the review is only six questions. 3. As a manager and an employee, creating goals is hard, especially ones that are useful. I think a person should have at most two goals, one technical, and one personal. 4. My company also created a rubric for being senior, which while not perfect, is better than nothing. It makes creating goals easier. 5. My company also does not tie pay directly to the reviews. Pay increases happen once a year in a specific month, and the reviews are used to inform that, but no discussion of pay comes out of it. It lets everyone relax more. 6. Part of the problem is promotion is too hard, and a manager has to really justify that. Adding that rubric above helps a lot.
1) there isn't very good definition of what most jobs are.
2) the definition isn't pulled through all your human capital management systems (recruiting, onboarding, career management, performance management, and off boarding).
So, I'm working on building a product that pulls 1 + 2 together.
Many people like to do things outside of that box, or hate being so constrained.
Companies also struggle to quantify the value of some of the things people do.
For example
- Employee 1: Sales rep, hits quota, shows up late, leaves early
- Employee 2: Sales rep, behind on quota, but everyone in her pod is crushing because she's spending extra reps helping them be better at their job.
It's likely that employee #2 is in the wrong role. But if you're a mega-corp manager, all you see is that she's behind on quota, and her annual review reflects that. Let's put her on a pip and find some more people like Employee 1.
It could be that Employee #2 isn't motivated by more money.
Telling her "Do more sales or you're fired" could end up being pretty bad for you.
You may end up getting what you want(employee 2 is gone) but not like what you get(decreased productivity for your other team members.
From the employee's perspective, there's usually little reason to take annual reviews seriously. The fact that they are annual and not more frequent subtly communicates that any negative (or even positive) feedback really is not that important, if at all, and savvy employees who care about maximizing their earnings should consider whether it's worth investing effort into "improving" when said improvement is unlikely to translate into a bigger paycheck or a fancier title. Some companies try to counter this by having employees self-review, but this backfires in a number of ways. For one, employees are incentivized to either exaggerate or downplay their strengths and shortcomings. "Always room for improvement", right? If an employee legitimately can't think of anything they need to improve upon, they're liable to make something up just so they don't stick out like a sore thumb. One way that this system does work out for employers is that it can encourage less savvy employees to work harder than they did before but for the same pay, but this may also cause burnout and higher turnover when these peons realize their station at the company and move on to better things.
In rare cases, annual reviews can be used in an effort to get rid of poor-performing employees. This is not as common as people think, and is even less common the bigger the company gets. Businesses want to maximize productivity, but that doesn't mean they care enough to outright fire the mediocre or even lazy employees. Mediocrity can actually work in the favor of the business because, if such mediocrity is permitted, they can hang on to employees longer than if they demanded the kind of extraordinary excellence they claim to in job ads. "We only hire the best." No, you don't.
It's a complicated problem and it's also more a social/relationship problem than really a technical problem. How people interpret what you've done is much more important than what you've actually don't.
Please don't try to come up with technical solutions for social problems, I see engineers trying to do this and failing all the time.
And having everything be extrinsically motivated is horrible for job satisfaction. It would actually be better to hide the reasons for raise/bonus as much as possible so people want to do their jobs for their own satisfaction (obviously people want to get paid too but it’s best not to have thoughts like “if I fix this bug, what’s the exact $ bonus increase I get”).
No one is on the same page about it. The purpose of annual reviews is unclear, misunderstood, and misinterpreted, leading to a broken implementation in practice.
Even when there is an attempt at clarity, emotional kneejerks interfere anyway. ex: Telling someone that they "Meet Expectations" when those expectations are very high just results in them feeling like you've called them "average" somehow, and people outside that process are absolutely going to misinterpret it as "Average" leading to a continuing failure to get somewhere constructive.
Most of the time, there aren't great ways to be usefully objective about performance, anyway, due to missing context.
In any case, the important part for me is to make sure that when you have your yearly or quarterly conversation there are no surprises. If there are, communication broke at some point earlier on and you and your manager should work on fixing it.
I have been told by my manager that the only acceptable ratings are either a "3" or a "4" where a 3 is doing your job at 100% accepted capacity and a "4" is going above and beyond.
The only way to earn a "5" is to wear reed sandals and walk on water. A "2" means immediate PIP and a "1" means you are going to be escorted out the door.
Throwaway account...don't bother searching my history.
Companies and employees form into these longer term relations in an attempt to reduce the burden of creating these types of task based contracts. Is it more efficient? Maybe, since it is more common than contract work.