Why great employees hate performance evaluations

by Jeff Haden: Bestselling non-fiction ghostwriter, speaker and columnist for Inc.com.

Ever given an employee a great performance review, only to have them walk away unhappy? Here's how to avoid that.

After the 1992 Barcelona Summer Olympics, researchers from Cornell University studied the facial expressions of all the athletes who won gold, silver, and bronze medals. They analysed footage of ceremonies and television interviews and found that gold medalists seemed the happiest.

What a shock, right?

But they also noticed something surprising: The bronze medalists seemed much happier than the silver medalists.

How could athletes who finished third be happier than athletes who finished second? The answer lies in understanding what psychologists call counterfactual thinking, or what the rest of us call, "Wait; if only..."

In simple terms (handily enough the only terms I understand), counterfactual thinking occurs when we imagine how things might have turned out. When something happens - especially something significant - we think about alternatives to our current reality in order to place that event in context.

Counterfactual thinking sometimes makes us feel good about where we are in comparison to where we could be. And sometimes it makes us feel worse. Either way, we do a lot of comparing: Between where we are and where we could have been... both positively and negatively.

So take the silver medalists: They used an upper counterfactual, meaning they judged themselves in comparison to the gold medalists. As a result their, "Wait... but what if?" questions fell along the lines of, "Wait; if only I had just trained harder... then I might have won a gold medal," or, "Wait; if only I had just gotten a little better start... then I could have finished first."

Silver medalists tended to dwell on what they could have done differently to win the gold.

Contrast that with the bronze medalists. They used a downward counterfactual, meaning they judged themselves in comparison to all of the people who didn't win any medal. By comparing themselves to what could have been - no medal at all - the bronze medalists felt thrilled just to be standing on the podium.

And that made them seem happier than the silver medalists.

Counterfactual thinking at Work

According to James Adonis, an expert on employee engagement, counterfactuals occur in the workplace as well - especially during performance evaluations.

"Research shows the majority of performance appraisals have zero impact on performance," James says. "One reason for this is that appraisals are often laborious. When both employees and managers dread them, they can't ever be effective. And another reason can be attributed to counterfactuals."

For example, when you give an employee a less than perfect rating, it's natural for him to think about what could have been. If he uses a downward counterfactual that's great, because he's happy: Comparing his evaluation to what it could have been - much more negative - makes him feel good about her performance.

But if he uses an upper counterfactual he may become angry or resentful and definitely won't feel good about his performance. And he'll probably only remember those feelings of disappointment and not any of the specific and constructive feedback you provide.

The key is to minimise upper counterfactuals whenever possible. That way employees will not only be more open to suggestions for improvement but will also be more likely to accept - and remember and feel good about -s the positive feedback they receive.

Here's James' advice:

To minimise upper counterfactuals before an appraisal:

  • Eliminate surprises. Hold enough feedback sessions in the months leading up to the appraisal so that employees can accurately predict what they'll hear during the appraisal. (If I'm surprised by formal feedback, that's your fault - not mine.)
  • Set clear expectations. Ensure employees completely understand how their performance will be measured. The more they know about what you expect, the more likely they are to be objective about their own performance... and the less likely they will be to have mistaken impressions that cause them to use upward counterfactuals.
  • Ask questions. Have honest conversations to explore what your employees expect. Then you can correct incorrect impressions or perceptions in advance - or at the very least be prepared to deal with them.

And here's how to deal with upper counterfactuals when they happen during an appraisal:

  • Don't argue or debate. If an employee gets emotional, let him vent. (Sometimes all we want is to be heard.)
  • Paraphrase what is said to prove you listened and understood.
  • Ask further questions to learn about the underlying reasons for how the person feels. The more you know, the better you can respond - and sometimes empathise.
  • If necessary, refer to previous discussions when you talked about performance issues.
  • Be prepared to concede that maybe... just maybe... your feedback is inaccurate. It does happen.

In short, be fair, be honest, be straightforward, and consider not only the feedback you will give but also the impact - especially in counterfactual terms - of that feedback on each employee.

When you do, your employees won't need to reach the top of the podium to feel they're winners - and to walk away feeling motivated to keep improving.

Useful resources:
BlackBird Media
Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry from forklift driver to manager of a 250-employee book plant. He has written more than 30 non-fiction books, including four Business and Investing titles that reached #1 on Amazon's bestseller list.
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