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> In my company, years ago, performance rating was done by your line manager just talking to your project manager(s) to find out how you were getting on, and the line manager would assign you a pay rise (or not) accordingly. This was a perfectly sane and workable system.

That sounds very much like "hiring people based on having a reasonable conversation about their experience.” It is a perfectly sane and reasonable system, provided everyone involved is acting in good faith, has a great deal of ability to evaluate people based on their actual contribution to the success of the company, and nobody has any overt or internalized biases.

Without taking anything away from your company, I’m sure you will appreciate that in many companies, this business of “assigning you a bonus based on conversations with the project manager(s)” gets twisted into a horrible political game where people build fiefdoms based on tit-for-tat agreements, and where all sorts of biases come into play, e.g. the men are all “take-charge go-getters,” while the women are all “confrontational and bossy.”

I’m saying nothing about performance evaluations being better, just that results like you have experienced with your company are remarkably difficult to reproduce and sustain.

My bet is that if conversation works in your company, performance evaluations would also work. Maybe with more annoying paperwork involved, but it would still work.

Both systems have their downsides. The simpler system generally has fewer, and that makes it preferable in many ways. But there could also be a different simple system that has fewer downsides.

It's important to first think of the active system at play and its influences on people, and second, try to improve it without disconnecting the model from reality.

This is a hard problem, and is one of the reasons leaders and managers need systems thinking skills above all.

> Both systems have their downsides. The simpler system generally has fewer, and that makes it preferable in many ways.

[Citation needed]

Also, I find the version with paperwork better, because that creates a documentation trail. If someone is routinely favoring certain people or groups, documentation makes that easy to expose. As opposed to the "word of mouth" system where it's likely impossible.

You're asking for a citation on the usefulness of parsimony as a principle, which I find relatively funny.

Also, looking for proof in a complex system will often lead you down the path of least resistance (the path for which it's easiest to find supporting proof; not necessarily the best path). So asking for proof is just evidence of a lack of systems thinking at play.

Ability to understand your specific system and guide it is the far more important factor.

> [Citation needed]

You ask for a citation for an opinion (see: "preferable") then proceed to share your own semi-claim without a citation.

Though probably not intended, saying "Citation Needed" can be off-putting and wastes time in discussions where if you spent a few extra seconds, you could ask a more thoughtful question. For example, your abridged quote has numerous elements and the target of your critique is unclear.

Lighten up!

There is no opinion in this statement:

> Both systems have their downsides. The simpler system generally has fewer...

I merely quoted the remainder to complete the sentence.

I agree with your comments in a general way, but argue that in many organization, the system with the fewest overt rules and processes devolves into a complex set of covert rules and processes.

It appears simpler at first glance, because the complexity is deliberately hidden. The oft-quoted example concerns “structureless” organizations:

http://www.jofreeman.com/joreen/tyranny.htm

This is not universal, but something to guard against: That the “simpler” system is not, in fact, a structureless environment where manipulative individuals will create an invisible complex system.

michaelochurch has advocated "open allocation" which should help.

We possibly work for the same company, as our system - flaws and all - are identical to what you describe. As someone who has to carry out both sides of the process (reviewing staff/managing them through the process, and getting my own review done), I'm most certainly not a fan! Staff seem to fall into two categories - those who see the whole thing as political nonsense they don't have the time for, or have become so turned off by how bad it is that they just don't care about the outcome any more.

The Accenture news was raised on an internal discussion about the review process almost immediately, as some people are that keen to get rid of the current way of doing things ASAP. Sadly, I can't see anything coming from it, as the word is that Upper Management values the generated metrics too much to change anything.

well, don't blame them. above certain position (which is usually pretty low), politics overcome skills in terms of progress in career. so what do you expect from bullshitters who bullshitted their way up there into positions of power, that they would cut off their own source of (current and future) success? :)

I work in same type of company, and it's pretty obvious how this and similar corporate cr*p clearly doesn't bring the best out of people, sometimes in contrary. If I would be owner/shareholder of any company, ever, first thing I would be concerned how incentives/bonuses for that extra mile/good work are being given. The higher the management, the more bonuses would be tied to long term progress (i know it's easier written than done, but i consider it at least partly responsible for financial turmoil of recent years too).

Rather than politics, I think the primary motivation is predictability and control over costs and the ability to link costs to the company's financial performance. A ranking process that buckets employees into performance categories allows you to determine the company-wide increase in salaries and the bonus pool first and work backwards to arrive at each employee's raise/bonus. And since bonuses are usually timed with the end of the fiscal year, that increase (or lack thereof) can be based entirely on the numbers they deliver to investors.

Also, by forcing a relative appraisal of each employees performance, you force managers to view employees with a more critical eye. If I were to simply have to answer, "did X do a good job on this project?", my answer would almost always be yes, absent any incentive to say no. But there are members of my team who deliver significantly better than others, so the calibration process forces me to find a way to put them above the team members who perform at a lower level. Getting rid of performance reviews would, from what I've seen, create a culture of "don't screw up" rather than one of taking risks and trying to do as well as possible.

As a manager who both received an annual performance review and delivered 10 of them in the past week (our FY15 ends 7/31), I hate the process more than most people. But I think this discussion is ignoring the advantages just because we all hate the process. We run the risk of creating a whole new process that we hate just as much as the old process. Because it all boils down to finding an impartial way to evaluate performance and, unless you can crack that nut, your process isn't going to work. Top performers will move on and you'll be left with only under-performers. And that's because humans naturally evaluate their circumstances relatively rather than absolutely, once you get beyond the basics (i.e. can I pay rent and bills). Someone making $100k/yr is going to feel underpaid if someone they feel they're better than makes more. Just because the current system for ranking is flawed doesn't mean that there doesn't mean that ranking isn't necessary.

The review/ranking process is not going to influence if top performers stay one way or another.

I'm strongly skeptical that the review process that I've seen various company is any good at helping to make the real connections between employee performance and company bottom lines. In the end, the ranking process of doling out salaries is fooling itself by cloaking the process in numbers.

I'd say that having performance reviews enforces: 1) culture of "don't screw up". (Yes, opposite to your thought) What risks would anyone will want to take if it means preparing yourself to be scapegoat if something will not work out perfectly? 2) enormous amount of politics, lies, and self-promoting by shameless liars and back-stabbers. How can you tell whether someone delivered significantly better then others? In most cases it's mutual BS feeding/consuming between manager and certain type of employees.

> How can you tell whether someone delivered significantly better then others?

I can tell because I don't suck at my job. I look at pull requests. I look at ticket completion. I'm with my engineers during planning to know whether people are padding their estimates. I make a note whenever someone steps up in some way (handling emergencies off hours, helping another developer get their work done, etc.) If a manager doesn't understand the work of the people s/he's managing, that manager is unqualified to do the job.

As to your 1), it all depends on what type of culture a company has and how much employees are punished for screwing up. At a company like Facebook, you're expected to "move fast and break things." I'd be very surprised if people were inhibited there. If you're at a bank where screw ups mean someone gets fired, you're probably right.

One of those software management coaches once complained about this structure, "instead of celebrating people for their strengths, we punish them for their weaknesses". Most companies have enough people that as long as I'm really good at three things and we all know which three things I'm terrible at, everybody gets what they need and the company flourishes.

Instead we all have to be identical, and our "development plan" is all about getting better at doing things that normally I'd let somebody else take care of, because they will always be better at it than I am. No big raise for me, even though I've saved you two headcount and reduced regressions by a factor of four by improving the dev process and toolchain.

Oh, you're surprised I gave my two weeks?

Ernst and Young was that way when I was there ~2012

In this case, I'd say number 2 is your fault. Your company has clearly told you that they care more about what you write in your self review than in actually getting stuff done. Those people have realized this, and are simply giving the company what they asked for.