I have a confession. I judge that judgment sucks and that exploration, discovery, and growth are better. Before you flip the Bozo Bit on me for judging judgement, let me start by saying that my preference for exploration is leading to a greater understanding of the power and place for judgment and evaluation. But first please let me dump on the Performance Review, the subject of a workshop I’ve already co-facilitated at the North Bay Agile Meetup last week, and which we’ll be leading again at Agile 2011 in Salt Lake City this week.

Since I left college, every year I’ve experienced the pain and the drudgery of evaluating my performance to my employer. The appraisals that I judge were the best were the ones that had the goal setting happen well after the goals had already been accomplished, and that were very appreciatively delivered by my managers. The ones I judge were the worst were the ones made most conscientiously and carefully, with objectives set well before the event and a serious attempt to bring about improvements.

If you’re lucky enough not to have gone through the dreaded Annual Performance Review with a manager in your job, you’ve either been self-employed your whole life or you’re like 13. But if you can read, you’ve almost certainly gone through a massive amount of social induction through the process of being criticized and judged yourself. Joel Spolsky says this with the most humor in a blog post “Incentive Pay Considered harmful“:

Most software managers have no choice but to go along with performance review systems that are already in place. If you’re in this position, the only way to prevent teamicide is to simply give everyone on your team a gushing review. But if you do have any choice in the matter, I’d recommend that you run fleeing from any kind of performance review, incentive bonus, or stupid corporate employee-of-the-month program.

The most depth I’ve seen on this topic comes from American management guru, Dr. W. Edwards Deming. I’ve known about Deming for many years, but it was thanks to Bob Payne’s awesome Agile Toolkit Podcast with Kelly Allan that I found out he’d already chimed in decades ago about my topic. Deming passed away in 1993, but he’s most famous for his work in Japan starting after WWII from 1950 onwards. Many credit the economic miracle of Japan after WWII to Deming. The Japanese listened to his advice and took it to heart. Deming’s work was extremely influential in Toyota Production System which led to the Lean Manufacturing movement. In one of his books, Out of the Crisis, Deming listed performance evaluations as one of the seven deadly diseases, and he went on to say:

Evaluation of performance, merit rating, or annual review… The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.

A video that made the rounds quite a bit last year called “Drive: The suprising truth about what motivates us“. If you haven’t seen it – watch it! Then do what several colleagues and I did after that – and read the book – Drive – by Dan Pink. The basic idea is that extrinsic motivators like pay for performance, bonus pay, etc. do not lead to better performance. Extrinsic motivators actually make it worse for anything but the most simple and menial tasks. What does lead to better performance is intrinsic motivation which comes from Autonomy, Purpose, and Mastery. Great book!

To go back to Deming, what makes a difference in performance, what helps trigger and grow the factors that can nurture intrinsic motivation are healthy relationships. Deming said in the introduction to The Team Handbook:

The fact is that the system that people work in and the interaction with people may account for 90 or 95 percent of performance.

Bottom line, what will make a difference is building relationships – creating a high trust environment. This has been written about elsewhere and often, such as in Stephen M. R. Covey’s, At the Speed of Trust. But the Annual Performance review puts a kind of power into the hands of managers that does not empower the relationship. It encourages a split agenda with the employee trying to focus on why they should get a raise and a promotion, and the boss trying to get more out of the employee within their limited budget. Samuel Culbert writes eloquently about this in his 2010 book, Get Rid of the Performance Review! His 2008 Wall Street Journal article of the same name caused quite a stir at my company and spurred me on to propose a workshop on the topic. It’s exciting to be exploring this in more depth with the amazing Chris Sims of Agile Learning Labs in just a few days! What seems evident is that managers can have a much greater impact on team performance by both being a coach and encouraging teams to support each other. I’ve taken this lesson so much to heart not just for improving performance, but for becoming a transformational change agent, that right now I’m writing this article on a challenge from a fellow student at my Fulfillment class from the Coaches Training Institute at their headquarters in San Rafael.

But my research into the topic led to a trail of discovery that keeps going deeper, in a way that evaluates evaluation itself. Westley, Zimmerman, and Patton wrote a powerful book titled Getting to Maybe that resonates with my explorer’s soul. The story has nothing to do with employee performance reviews, but it has everything to do with the title of this post even though I’ve only glimpsed the shore of this, for me, strange new land. The book relates multiple stories of normal people instigating enormous changes, accomplishing the impossible, but not by being superheros. I can’t hope to describe this other than through the hints and clues from a friend that led me to pursue the book. In a nutshell, much chaos is caused in evaluating and funding social innovation without an understanding of complex systems. A simple system might be compared to baking a cake. There is a formula and a recipe that will produce consistent results. Then there are complicated systems, which might compare to sending a rocket to the moon. There are many moving parts and teams that have to be coordinated. But if you solve the problem once, you’ll probably be able to solve it again. A complex system might compare to raising a child. The child has a will of its own. Although the experience of raising one helps, it most certainly does not guarantee success for the next child. The answer I have yet to explore in this new land is called Developmental Evaluation.

I have a preference for exploration and discovery. And it seems that my explorations are showing that there is a way to make judgments and evaluations in a helpful way. I’m certainly clear that there are times when choices are necessary. The exploration and discovery continues. There is more ground to uncover before our workshop in Salt Lake City: Undoing Performance Review Damage – Coaching Towards Customer Purpose. But here are some additional places on the map you might want to visit for this topic:

Catalytic Coaching: End the Performance Review – a book by Garold Markle who founded a company that has replaced performance reviews with a coaching process at over 100 companies.

Software For Your Head – a book by Jim and Michele McCarthy about their team development laboratory bootcamp which includes an amazing feedback process called the Perfection Game.

Sense and Respond – The Journey to Customer Purpose – a book by Barlow, Parry, & Faulkner. This book was part of the inspiration for the presentation we did in San Rafael and that we’ll do again in Salt Lake City. Coming from the perspective of Lean Manufacturing ideas implemented at service organizations and beyond, the transformation is multifaceted and involves coaching as well as a greater understanding of what the customer needs to succeed.

[Addendum: The research for my Agile 2011 conference session can be downloaded from the Agile Alliance website here.]