Dear EverMore: Untangling Performance & Compensation
Dear Readers,
Episode 4 of Dear EverMore dives into the murky intentions of performance reviews, and why they’re not a reliable exercise for reflection and growth.
Performance reviews serve too many masters—compliance, compensation, retention, development. With so much on the line, they turn everyone into performers.
It’s a bit like Goodhart’s Law, when people are rewarded or punished based on specific measures, they optimize for those measures. For a review, this could look like an individual sandbagging their goals with easy-to-achieve targets or writing the self-assessment as pure marketing material.
For growth to happen, the review needs to be decoupled from people decisions.
People cannot be honest when too much depends on it.
A useful performance review needs to be honest about strengths, growth opportunities, career aspirations, and others' perceptions.
Any leader worth their salt needs this information to utilize and evolve their people for the business's needs. Yet, companies tend to use reviews for unnecessary measures like stack ranking, raise distribution, top grading.
So, individuals are incentivized to soften their edges. And managers are incentivized to mold the review to the outcome (good/bad) that they want. These preferences are easily masked by the appearance of calibrations or quantitative data. Because, it’s difficult to align across even the best managers.
After reading hundreds of traditional reviews, here are the things I can consistently learn from them:
When a manager and the individual either aren’t aligned or aren’t talking.
When an individual is outgrowing their role either in skill or interest.
When a manager is holding different standards across their team.
It's good intel, except most companies aren’t using reviews for that. This gap between what a review can actually reveal and what it's used for causes anxiety.
Transparency reduces anxiety.
When people don't know what's true they become detectives. They spend time filling in missing information and creating stories.
Being transparent about evaluation criteria, compensation, promotions, what an individual can expect from their manager, and more shines a line on all the conflicts of interests inherent in the standard review process.
Here are a few ways I've successfully untangled performance + compensation at previous startups...
Making compensation 100% transparent (yes, 100%!), where employees can see the market data for their role, how a role's level was determined, what you pay for a role, and a full spreadsheet of everyone's compensation.
Establishing automatic annual raises and sharing a calculator so employees know what they should expect with each anniversary.
Being purposeful with how career development occurs by using growth plans and promotions briefs to plot out everyone's advancement.
Compensation can change someone’s life. It should neither be hidden nor tied to a review that relies on the dance between two people with a power imbalance.
Final Thoughts
Being anti-performance review is about so much more than compensation—It’s about challenging systems that are not working for most people. I don’t think they’re working for companies either.
Everyone in an org expends a lot of energy on a process that can’t possible meet all its intended purposes, and that’s not to mention all the emotional whiplash.
At the beginning of this episode, we talk about releasing control and attachment styles. The latter can show up as managers avoiding the hard conversations and employees feeling anxious when they don't know how they're really doing.
So, I think our attachment to performance reviews are a facade of control that needs to be released.
xoxo,
Courtney @ EverMore
Dear EverMore is a new podcast hosted by Courtney Branson & Kelsey Peterson. It explores how work shapes our humanity, identity, and futures. Season one features diary-esque confessions, guest speakers, and career advice plucked from their collective three decades in HR, hiring, and leadership.
