UXDX

It's the most wonderful time of the year - performance reviews!

Everyone can improve and feedback can really help people identify where they should focus. But annual performance reviews are less about improving performance and more about a way to explain who gets a bonus and who doesn't.

If the goal was performance improvement then more timely feedback is much better as it enables employees to adjust and improve their performance continuously rather than once a year.

Research in behavioral economics and psychology suggests that bonuses are not an effective way of motivating people in tasks requiring cognitive skills and creative thinking (e.g. software development). And what's worse is the negative effect of missing bonus results in a larger hit on motivation than the impact of receiving a bonus. It's a net negative.

Everyone loves bonuses though and there is a better way to do them. If you can enable a team to work autonomously and give bonuses based on their outcomes the research backs this up as being highly motivating. Another win for cross-functional teams.

What are your thoughts on performance reviews?

1 year ago | [YT] | 0