PRODUCTHEAD: Performance appraisals are underperforming
PRODUCTHEAD is a regular newsletter of product management goodness,
curated by Jock Busuttil.
Performance appraisals fail to take into context whether the organisation is permitting them to succeed
Deming: “a bad system will beat a good person every time”
Personal development and performance are different things
Shift performance management from the individual to team, group, or organisational level
a favour: please share this with other product people
every PRODUCTHEAD edition is online for you to refer back to
I’ve never held a great deal of affection for the strictly formal hierarchy that characterises many large organisations. (I’ve written about it before, here and here.)
I share the frustration of many good product people I’ve worked with, who want to make a difference and do the right thing, but are continually hampered by the levels of bureaucracy they have to navigate before they’re allowed to do anything. The organisation systemically distrusts their teams.
A bit close to the bone #
And while satirical in nature, I’m sure we’ve all seen examples in practice of the Peter principle (competent people will continue to be promoted until they reach a level where they are no longer equipped to do their job, and so plateau in a state of incompetence) and of Scott Adams’s Dilbert principle (“leadership is nature’s way of removing morons from the productive flow”, Dilbert, February 5th, 1995).
Can you thrive in a hierarchy? #
The most disheartening thing about this? After a while, it saps the energy of most good people to such an extent that they lose their motivation. Some accept defeat and compromise their personal values to become mediocre (while silently hating themselves for doing so). Others leave to work for a different and hopefully more enlightened organisation. A small minority of people I’ve met (and envied) seem to have that Goldilocks mix of tenacity, diplomacy, motivation, and unrelenting optimism, and are able to thrive even in the most Machiavellian (or Orwellian) of situations.
Salary reviews #
Hand-in-hand with hierarchy goes the problem of salary reviews. A hierarchy reinforces the notion that the higher up you go, the more responsibility you have, and so the more valued you become. As a consequence, the main way for people to significantly increase their salary (without leaving to join another organisation) is to scale the corporate ladder.
While you’ll also see this in many companies, this is particularly problematic in public sector organisations where the upper limit of your pay range is bound to your job title and grade. The only way to break through that salary limit is through promotion, which is often only possible if there’s a vacant position above for you to take (sometimes colourfully called “dead man’s shoes”). And given the nature of a hierarchy, the higher up you go, the fewer available positions there are.
Performance reviews #
Annual performance reviews in theory provide another opportunity to increase your salary in recognition of how well you’ve performed. However, these appraisals often follow a quota system, where there’s a limited pot of money available for salary increases, the relative performance of all employees is assumed to follow a bell curve, and salary increases will only be awarded to those above a certain percentile. There are a few problems with this approach.
Because performance is assessed relatively, rather than using an objective, absolute yardstick, there’s usually no consideration for the situation where most people have been repeatedly going the extra mile. In other words, the assumed bell curve is skewed to the right towards over-performance. If the yardstick for expected performance was objective and absolute, a much larger proportion of staff would receive a pay rise. (And even then would receive a smaller share of the limited pot of money.)
But because the yardstick is relative to and moves with the bell curve, when everyone is over-performing, the quota system paradoxically ignores all but the highest of the high performers for doing so. So why bother going the extra mile in the first place?
Appraisals highlight organisational flaws #
“360-degree performance appraisals … are arguably flawed because they rely on the people giving the feedback to be completely objective, rather than take the opportunity to either do a favour for their drinking buddies or exact revenge for some perceived past slight. At what point did corporate performance appraisals become a popularity contest?”The Practitioner’s Guide To Product Management by Jock Busuttil
Like Elizabeth Ayer, whose insightful and measured article I’m sharing with you this week, I believe that annual performance reviews also magnify other organisational flaws:
- Poorly chosen or misaligned goals and incentives
- Absent corporate strategy
- Internal politics colouring the view of whether some initiative succeeded or failed
- Rewarding output (productivity) rather than outcome (performance)
- Undue influence of subjective feedback, rather than objective evidence
- Recency bias (recent performance unduly masks less recent achivevments)
- Measurement by proxy (product performance for product manager performance)
Designing a better recognition system #
If you’re designing your team’s career paths, how they get promoted and how they’re awarded a higher salary, consider how you can break the traditional dependencies:
career paths should allow promotion without forcing a competition for an artificially limited number of senior positions;
promotion should happen naturally in recognition of an individual’s increasing levels of experience and capability;
salary should not depend on job title or seniority of position, rather on how objectively valuable that individual is to your organisation (given a baseline market rate for the role);
individuals should receive coaching to help them achieve their potential, which in turn governs how they increase their experience and capability;
performance should be measured without proxies, as objectively as possible, and on an individual basis, without normalisation to the rest of the team.
Final thoughts #
Traditional corporate performance appraisals are a distraction. The most important measures of your performance are ultimately your own: whether you’re fulfilling your potential and whether you’re happy doing what you do. All else should be secondary.
Speak to you soon,
P.S. Introduce a friend to PRODUCTHEAD and you can win one of four free tickets to an in-person #ProductCon in San Francisco. Details below.
what to think about this week
Annual performance reviews ruin everything
I’ve been on both sides of performance reviews, receiver for most of my 20+ year career and giver for 4 of the last 6. I’ve also been intimately involved in processes to improve the processes. From first exposure, my experience of reviews was at odds with other messages I was hearing from orgs, so I carefully observed the effects on people, read widely, and talked with other people to make sense of it.
The vibe from managers where they still happen is typically “enh, they’re not ideal, but what can you do?” They are rarely taken as seriously in their toxicity as they should be, and this repeatedly causes harm. Hence laying out the case here to coalesce opinion to quarantine and ultimately eradicate them completely.
[ELIZABETH AYER / MEDIUM]
Putting people back into performance management
The way most companies approach performance management is completely broken. Everybody knows it, yet there aren’t many companies or managers seeking more progressive approaches.
“Stop putting people into boxes. Boxes are for dead people.”
How to measure product manager performance
Early on in my blog, I wrote one of my most popular posts – 4 key ways to spot a successful product manager – about measuring the performance of product managers. The problem is that a lot – and I mean a huge amount – has changed in product management, and my own approach, since I wrote it.
I found myself describing to Martin Eriksson at his recent book launch some work I did at the UK’s Ministry of Justice on measuring product manager performance. So here’s an update to my original article from a real-life case study.
[I MANAGE PRODUCTS]
Whatever this is, this web3 product manager role is not a product manager
Jason Shah wrote a guest post recently for Lenny Rachitsky’s newsletter, “A Product Manager’s Guide to web3”, which describes how product management differs in web3 companies. He notes that joining a web3 company can be “an opaque process and a risky decision”. I’d add “ethically challenging and morally grey” to that description.
“You keep using that word. I do not think it means what you think it means.”
[I MANAGE PRODUCTS]
Sorting the signal from the noise — a guide to fact-checking
One of the most important, and arguably hardest jobs we have as product managers is to work with our team to sift through information, read between the lines, and verify what is fact and what is merely opinion.
[I MANAGE PRODUCTS]
upcoming talks and events
10th May 2022
#ProductCon San Francisco May 2022
#ProductCon — in person #
The first in-person #ProductCon since 2020 is happening on May 10, 2022 in the San Francisco Palace of Fine Arts 🤯
And you can go along with one of four free tickets worth $479 each!
What you need to do — easy as 1…2…3 #
❶ Get one of your fellow product people to subscribe to this lovely PRODUCTHEAD newsletter (imanageproducts.com/subscribe).
❷ Then (with their consent) let me know the email address they’ve used to subscribe.
❸ If they confirm their subscription, then I’ll let you know you’re in the draw to win a free ticket.
I’ll select 4 winners at random on Tuesday 26 April 2022.
Terms and conditions apply to this prize draw, please read them below before you enter.
Learn from Meta, Amazon, and Google Product Leaders #
Organized by Product School and structured around the hottest topics in Product Management, ProductCon takes place four times per year and gathers over 15,000 product professionals from all over the world.
ProductCon highlights Product Leaders from diverse backgrounds and leaders of color. You’ll learn from inspirational Heads of Product, VPs, and CPOs from tech giants such as Amazon, Netflix, Spotify, and more.
Prize draw terms and conditions #
- This prize draw is operated by Product People Limited (“we“, “us“, “our“).
- We will select the winners at random on 26 April 2022 at 16:00 BST. We will accept no entries after that time.
- We will contact each winner individually after the draw and will publish a list of the winners’ names with their consent in the following PRODUCTHEAD newsletter and on our website.
- You must be an active subscriber to this PRODUCTHEAD newsletter to participate in the prize draw.
- We will accept only one entry into the prize draw per person.
- You must be 18+ years old to enter.
- No purchase is required to enter.
- Each of the 4 winners will receive 1 ticket to #ProductCon San Francisco (May 10, 2022), which is run by Product School Inc.
- You must seek the consent of each email address owner before sharing their personal information with us.
- To qualify for entry into the prize draw:
- with their consent, get 1 person to subscribe to this PRODUCTHEAD newsletter at imanageproducts.com/subscribe ;
- you need to reply to this email or contact us to let us know the email address of the person you have referred;
- the person you refer will receive an email asking them to confirm their subscription to PRODUCTHEAD, which they must accept;
- the person you refer must remain an active subscriber to PRODUCTHEAD until the winners of the prize draw are selected.
- The retail price of 1 ticket (as at 9 April 2022) is USD$479 (excluding VAT).
- Prizes may not be exchanged for their monetary value.
- Should #ProductCon San Francisco May 2022 be cancelled for any reason, we will offer each winner instead access free of charge to our current pre-recorded training catalogue of 4 courses (worth USD$260).
can we help you?
Product People is a product management services company. We can help you through consultancy, training and coaching. Just contact us if you need our help!
Helping people build better products, more successfully, since 2012.
PRODUCTHEAD is a newsletter for product people of all varieties, and is lovingly crafted from a surprisingly large number of birthday candles.
Read more from Jock
The Practitioner's Guide To Product Management
by Jock Busuttil
“This is a great book for Product Managers or those considering a career in Product Management.”— Lyndsay Denton
Agree? Disagree? Share your views: