Season 2 - Episode 10: Sideways Flying Employee Reviews
It’s a beautiful Tuesday morning, and you’re just stepping into a semi-annual review with one of your favorite employees. You’re excited to recap all the progress the employee has had over the past six months, and eager to plan out what's next. What you don’t realize is that your employee has some huge expectations, and you’re about to get blindsided. Welcome to the wild world of employee reviews.
Background Story
Chris here. We mostly hired younger staff, and many of our developers started off as interns. We had a special recognition program that we did for our intern which was to get them a special gift when they finished their internship. We did this because interns were paid a fraction of what the rest of our employees were paid. They were also students who were used to saving every penny and would never splurge on themselves, so we used this as a good opportunity to recognize them.
For a few of our first interns we gave them new smartphones to celebrate the completion of their internships. One intern was an avid skateboarder, so we purchased an electric skateboard (Called a “Boosted Board”) for them.
From the founders perspective, we assumed all was good here, but we were wrong.
At our next round of employee reviews we got hit with a surprising truth: Some of the staff felt it was very unfair that some employees got gifts, and others didn’t. They felt like everyone wasn’t being treated fairly. What they weren’t aware of is how much less interns were making from a salary perspective. It was a tough lesson to learn. Our attempts to celebrate the success of the interns really backfired. What we thought was a motivator for the interns, and a moment to celebrate for the rest of the staff, had become a huge demotivator.
It’s a case of the Roshaman Effect: two people can observe the same event or outcome yet interpret it differently.
Outline
Reviews are a Myth Minefield: Employees don’t actually want feedback. They just want good feedback, mostly as that ties to their compensation and self-worth.
You can Actually Conduct a Meaningful Review : There are 5 steps to doing this right. We tackle them.
People join companies, but they leave managers: As a leader in your company, you have a disproportionate effect on retention. Don’t blow it.
Busted Myths
There are two myths in this episode:
The myth is that HR has no-brainer moves. There are no no-brainers in HR because of the complex of human behaviour. In this case, we had managed to demotivate a department of employees by giving an intern a gift. Somehow, other expectations had been set, ones that we never knew existed.
The other myth here is that employees want feedback. Wrong. Employees (people) only want good feedback. A Gallup study said: Just one in five employees agreed that their company’s performance practices motivated them.
Learnings
It boils down to meritocracy and self-worth. People want to know what they’re worth (and they think it's more). It’s another effect! This time the Dunning-Kruger effect: most people believe they’re above average, which can’t be true. That, and that people expect to be paid the same for the same work, which aside from some situations (such as gender, and other systemic problems) isn’t true. Seniority, quality of work, etc define how much people make. Your startup is not a co-op.
Management thinks that employees won’t compare their compensation with one another. Wrong, employees talk about these things. And they can get each other spun up. Someone gets a raise, why didn’t I? Someone got a skateboard, why didn’t I? In a weird way, some ways of showing employees you care actually deepens resentment and makes you as a founder not want to give away anything. It turns you right off.
Not only do you need to be fair to employees, but you need to also make sure that fairness is apparent to all employees.
5 important areas to cover when conducting a performance review. They are:
Convey your positive intent: Make it clear that you’re having the review to help the employee improve their effectiveness.
Describe specifically what you have observed: The key here is specificity. Identify very specifically things that the employee to can improve on.
State the impact of the behavior or action: Explain exactly why it’s important that the employee improve parts of their work.
Ask the other person to respond: Let the employee respond and have an open and honest discussion.
So What? Now What? Agree on a measurable path forward to improve.
After the review, it’s important to have regular follow ups to make sure the employee is progressing.
Summary
Reviews suck. People don’t really want feedback - they want good feedback.
There are no no-brainers in HR
Giving people stuff can result in surprising unintended consequences
There are 5 ways to do a review right, which we covered.
Be real, empathetic. Care. Make reviews fun.
Data And References
How to Conduct a Great Performance Review
by Frank V. Cespedes
Harvard Business Review - July 08, 2022
https://hbr.org/2022/07/how-to-conduct-a-great-performance-review