Research

Fear and loathing in the office: Studying the art of the performance review

Annual performance reviews can set stomachs to churning throughout the office, and with good reason. Tensions can run high if employees are put on the defensive by a supervisor who hasn't learned to conduct an evaluation effectively and with finesse. A professor of management at the W. P. Carey School of Business and his fellow researchers have discovered the key to successful performance reviews. Feedback, the researchers found, is more likely to be accepted and acted upon by employees if the criticism is given in specific, detailed terms, by a trusted, knowledgeable manager, in an environment that has been carefully cultivated to be feedback-friendly.

2006-02-15

Annual performance reviews are dreaded by many employees. Turns out they're not much fun for managers, either. In fact, many managers treat these performance reviews less as an opportunity to help their staffers than a painful chore — something to cross off their list so they can return to more important matters.

"Unfortunately, that's the way a lot of managers view the appraisal process," says Angelo Kinicki, a professor of management at the W. P. Carey School of Business. "They say, 'It's something I have to do.' It's generally not fun for them." Fun or not, performance reviews are an important tool managers can use to improve employee performance.

The feedback — either positive or negative — employees receive in these meetings can sharpen their performance, help them overcome their personal challenges and, in the best-case scenario, transform a bad worker into a good one. But while business researchers have known for years that managers should offer their workers feedback, they haven't come up with the best practices on how that feedback should be delivered.

So Kinicki, along with colleagues Gregory E. Prussia of Seattle University, Frances M. McKee-Ryan of Oregon State University and W. P. Carey School colleague Bin Wu recently set out to answer that long unresolved question: What's the best way to deliver performance feedback? "When people go into a performance review and get feedback from their bosses," Kinicki says, "the question is: 'Is there a certain way that a manager can deliver feedback that increases an employee's willingness to respond to feedback?'"

The answer, Kinicki and the team found, is a resounding yes. Feedback, the team says, is more likely to be accepted by employees — and employees are more likely to take positive action on the feedback — if the criticism is given in specific, detailed terms, by a trusted, knowledgeable manager, in an environment that has been carefully cultivated to be feedback-friendly.

In other words, the researchers say, there's a lot more to giving feedback than most managers think. And to get the best return from those painful annual reviews, managers and companies have to take several factors into consideration. "You will not get behavioral change in response to feedback unless the employee accepts it and perceives that it is accurate," Kinicki says. "People have to accept feedback. If they don't accept it, you'll get no change. That tells us that the fundamental issue in performance reviews is for managers to deliver feedback in such a way that employees accept it."

The new feedback research is closely connected to Kinicki's recent work on so-called Performance Management Leadership (PML), a management style that emphasizes staff cultivation by helping employees get better every day. Successful application of PML methods requires that managers communicate often — and communicate well — with their employees. While researchers have previously studied the art of giving feedback, Kinicki says his new research on performance feedback, published recently in the Journal of Applied Psychology, is the first to take a comprehensive look at how people perceive, accept, and ultimately react to feedback.

"What's very different about this work is that we're investigating the cognitive process that drives the behavioral change associated with performance feedback," Kinicki says. "People have not studied that process. We simply do not understand the cognitive process that underlies an employee's response to feedback." For the research, the team surveyed nearly 200 loan officers located at 24 different branches of the same bank.

The loan officers were asked by the researchers to complete a survey about their most recent performance reviews, two weeks after that review was given. The surveys were designed to help the researchers get a fuller picture of the workers' environment, and the way they felt about their performance reviews, based on six predetermined criteria.

The researchers wanted to know how conducive the bank's environment was to constructive feedback (feedback-rich environment), how accurate employees perceived their reviews to be (perceived accuracy), how much they trusted the source of their reviews (source credibility), how motivated they were to respond to feedback (desire to respond) and how likely they were to respond to the feedback (intended response).

The final criteria — performance — was obtained a year after the first round of reviews. By comparing each employee's progress, or lack of progress, in the months following the first review, Kinicki and the research team could see how each responded to their feedback. The team could then begin to understand how delivery of feedback affected employee performance.

"We gave this survey to the employees after they had their reviews and asked them basically to evaluate the feedback that was received: Was it specific? How much feedback did they get throughout the year? Does the boss actually know what he or she is doing?" Kinicki said.

"We asked them if they believed the feedback. Did they want to respond to it? Did they intend to respond to it? Then we came back one year later and obtained data on employees' most recent performance appraisal. We were trying to determine whether the reaction that people have shortly after their performance appraisal influences their behavior 12 months later."

It does. The team found that several factors — the specificity and timeliness of feedback, the credibility of the manager who delivered it, and the system by which reviews were conducted — influenced whether employees accepted feedback and subsequently reacted to it. The work has three major implications for managers.

First, Kinicki says, because an employee's response to feedback is more contingent upon their "cognitive processing" of that feedback than the substance of the feedback itself, managers need to consider how their delivery of feedback impacts the perceived accuracy of the feedback.

Specifically, managers would be smart to employ so-called "instrumental leadership" by laying out specific goals for their employees, monitoring how well the employees go about reaching those goals, and rewarding them for a job well done. "It is unlikely that employees will accurately perceive, have a desire to respond to, or intend to respond to feedback without instrumental leadership," the team wrote.

Second, because "the credibility of the source providing feedback has both direct and indirect effects on employees' desire to respond to feedback," managers must be aware of how they are perceived by employees. The study was unequivocal in its finding that employees are more likely to take action on feedback when they trust the source of that feedback. Consider the following example.

"Let's say a new manager who has never written anything in his or her entire life tells a professional writer 'You're a bad writer.'" Kinicki says. "This is an example of low source credibility. If, by contrast, the same manager has written two books and multiple magazine articles, suddenly this manager has a lot more credibility." Employees tend to respond to feedback given by credible sources.

Finally, the study indicates that companies should ensure that employees trust the appraisal system used to create performance reviews. Because employees were found "unlikely to accept, desire to respond, or intend to respond to feedback based on information derived from an invalid or inaccurate appraisal system," the study encouraged organizations to "spend the time and resources needed to improve the accuracy" of those systems.

One way to do that, says Kinicki, is to make feedback a year-round, everyday activity. There's no reason, he says, why employees should wait twelve months to hear how they are doing at their jobs. "In a lot of organizations, people use performance appraisals as a once-a-year ritual to give feedback, and the ones that think they are really progressive have quarterly reviews," Kinicki says. "My personal feeling is that feedback should be an ongoing thing. That's one of the dimensions of PML — it should be happening constantly. I mean, why wait? Why wait for every quarter?"

Putting the lessons of the research into practice can also help managers overcome one of the great obstacles of performance reviews: Delivering bad news. "Delivering constructive criticism" has long been a tough task for managers, both because of the discomfort it creates for the employee and because of the fact that people have a tendency to discount negative feedback in the first place, Kinicki says.

"Research shows that it's psychologically healthier for us to have a positive view of ourselves, even if you're not a great employee," Kinicki says. "This positive illusion maintains one's self-esteem. It makes us feel good. It's healthy. So when I give you bad feedback, it's going against that belief, and you will say, 'That guy doesn't know what he's talking about...' The giving of negative feedback leads to conflict, and who wants conflict? We avoid it, and generally as a result we give people more favorable performance ratings than they deserve. It's a historical problem."

But by avoiding the difficult task of telling an employee that they need to do better, a manager is undercutting his or her ability to get the most out of their staffers — and preventing their company from running at peak performance. It is essential for managers to provide specific, descriptive feedback in a timely manner.

Kinicki does not promise that, by building their credibility, creating a feedback-rich environment and delivering the bad news in highly specific terms, a manager will make the job of telling an employee about their shortcomings any easier. But he does say it can, at the very least, make the experience a worthwhile one.

"If we don't give feedback to our people," Kinicki says, "how can we possibly improve their performance?"

Management Faculty