Performance Reviews Actually Dull Your Brain

Among the hundreds of reasons to hate performance reviews, here's another: They dull certain parts of our brains. Temporarily, at least.

Research shows that when a person's status is threatened — something that often happens when we're told in a performance review how we need to improve — activity diminishes in certain regions of the brain. When that occurs, says David Rock, the author of “Your Brain at Work,” “people's fields of view actually constrict, they can take in a narrower stream of data, and there's a restriction in creativity.”

Not exactly a state of mind anyone wants to have. But we don't need neuroscience to tell us why the annual performance review song-and-dance is so universally reviled. We have our own reasons: the endless paperwork, the evaluation criteria so utterly unrelated to our jobs, and the simplistic and quota-driven ratings used to label the performance of otherwise complex, educated people.

What makes this annual rite of corporate Kabuki so baffling is that those of us getting and giving reviews aren't the only ones who hate them. Corporate leaders apparently aren't big fans, either. In surveys of managers and human resource professionals, leadership advisory firm CEB found that performance reviews, well, get pretty bad reviews themselves.

They're wildly inaccurate, for one: CEB's research finds that two-thirds of employees who receive the highest scores in a typical performance management system are not actually the organization's highest performers. Go figure. The reviews are ineffective, too: Managers told CEB that conventional reviews generate only a 3 to 5 percent improvement in performance.

Our collective distaste of the process worsened as the economy has stagnated, workplace dynamics have changed and a new generation of workers has emerged with different expectations. Managers are supervising more people and spending less time interacting with each. Making matters worse, raises are so paltry that the difference between getting a “4” or a “5” on your review might mean little more than taking the kids out for pizza every couple of weeks.

Meanwhile, in workplaces that have moved from command-and-control hierarchies to ones that value teamwork and matrix-style management, performance edicts from on high are a terrible fit. “They're designed as though they're Russia in the '60s,” management adviser Marcus Buckingham says.

That's especially the case for workers of a younger generation, who have come to expect immediate feedback in nearly every other aspect of their lives. “They put something on Instagram, and in 15 to 20 seconds they're expecting to know if it's any good or not,” he says. “So it's crazy for them to come into a workplace that's like, 'We don't care about you, and twice a year we're going to tell you what the company wants.' “

So why then, pray tell, do we still do performance reviews?

One answer: We always have. An “imperial rater” was apparently used as far back as the Wei Dynasty in third-century China to make performance evaluations of people at the imperial court. The Navy used performance ratings during the Civil War, says Kevin Murphy, a consultant. “These are large-scale, complex systems for making people unhappy,” he says. “They're not a new problem.”

By the time the 1980s rolled around and General Electric's Jack Welch fueled the rank-and-yank craze, in which companies rank-ordered employees and culled the bottom 10 percent, it was hard to imagine a world without them.

Another reason is the notion that company lawyers require them. The paper trail many companies rely on to support personnel decisions frequently happens not as part of the regular review process but after a company has decided to manage someone out. “I have had countless situations that go like this: I get a phone call from a client saying an employee's work is intolerable, and they need to take immediate action. But then I get the evaluation file and it says 'meets expectations,' “ says Garry Mathiason, chairman of the global employment law firm Littler Mendelson.

CEB found that a small but growing 3 percent of companies in 2012 had dropped traditional annual performance reviews. Studies have shown over and over again that “people simply think they perform better than other people,” says Mary Jenkins, an HR consultant who cowrote the book “Abolishing Performance Appraisals.” “Unless you rate someone in the highest category, the conversation shifts away from feedback and development to justification.”

That's why, two years ago, Minneapolis-based Medtronic “ditched the old style of performance management,” in the blunt words of Caroline Stockdale, a former chief talent officer for the $16.2 billion medical technology company. Out went the ratings that assigned employees a number between one and five, the forced bell curves that mandated how many “3s” and “4s” a manager could hand out, and the annual mountain of paperwork. “Ratings detract from the conversation,” Stockdale says.

She instituted a quarterly “performance acceleration” process that focuses on a handful of goals, has no numbers or ratings and includes a one-page summary. So far, fears that the changes would lead to managers not making tough calls about terminating people have gone unfounded. In addition, managers' increased freedom in the performance evaluations has led to double the average merit increases for the company's exceptional performers.

When she describes the new system to HR peers at other companies, she hears a lot of “I would love to do that, but ...” responses.

“The typical performance review system doesn't work because you're demotivating half your population, poking them in the eye with a sharp stick,” she says. And, apparently, dulling sections of their brains for a while, too.