My initial reaction was that this must be one naive ivory-tower individual, not having gotten out into the real world in twenty years or so. My secondary response was that he wrote this so that he could be published in the Wall Street Journal, thereby helping his ancillary consulting practice. Well, who wouldn't? But then I returned to my first inclination, that bright though he may be - and Alan Greenspan bright - he is naive. It is precisely this type of thinking that has lead to the problems that we are now facing in the economy and the possible solutions that such a disregard for management principles has led to.
But then, I had to take a step back and evaluate my reactions. I had emailed MJ, a Texas friend about the article, and she said, "You're going to hate me, but I got rid of performance reviews years ago, and my employees love me for it."
A professor at UCLA and a maverick HR Manager disagreeing with me. Could I be wrong? No way.
Synopsis - When in doubt or when you're certain start with your conclusions: You don't have to read the rest of this if you don't want to. I'll make it easy for you: Culbert's model is fraught with fallacies and assumptions that don't exist in most companies. Second, these large companies that are currently asking for and being given bailouts whose numbers boggle the mind if we understand them at all, have been terribly mismanaged. That, or senior management was dishonest or inept or both.
Congress hasn't been paying attention. There's been no oversight, now a much overused term but which relates to the one management principle of control. In fact, they got rid of regulations and have abrogated their responsibilities. Had these companies continued on the path that was set in the 70s and had they not had but one objective, making money at all costs, banking, automobile companies, and real estate would not be in the pickle they're in, dragging us with them. In other words, had the word performance in performance review been emphasized, we might not have to worry about the state of the union, not to mention retirement. So, Culbert is looking at reviews as though they have nothing to do with performance. And he gets to have a whole section of the Wall Street Journal. The whole world's gone mad!
The Initial Culbert Fallacy: First, let's modify our thinking by acknowledging Dr. Culbert's definition of the review as being boss-administered and one-sided. Those of you who have read my papers will see my own negative experiences with the 360 degree review, so let's stick to the "classic" performance appraisal. But then, Culbert undermines my confidence in his thinking by stating that he sees reviews as "intimidation aimed at preserving the boss's authority and power advantage" which is unnecessary because "the boss has power with or without the performance review."
This is the first of several fallacies in Culbert's article. I've seen bosses who are lazy about filling out performance reviews. I've seen bosses who fill out performance appraisals to raise the grades and salaries of their favorites, and I've seen them do the opposite. But rarely have I seen the process - yes, process - used to enhance the actual or perceived power of the boss. That's just too much trouble especially when the boss can be so much more direct in making life miserable or wonderful for employees.
Once upon a time, I took a graduate course in logic (which I found to be very illogical, but it was a requirement for the degree). Vaguely, I remember some of the principles, and I think the one that Culbert has trapped us with is the Law of the Excluded Middle which says that everything is either true or false and there's nothing in between. We know how much trouble that gets us into - has gotten us into - or has kept us from being more innovative and creative in preventing and solving problems.
Adding the Automotive Ingredient to My Stew: As an example, it is as if Ford executives said, we should put all our eggs in the Explorer 10-mpg basket because the profit margin is so great and some piece of junk that gets good gas mileage to keep those tree huggers in Washington happy. In the middle? What should we put in the middle? How about a Mustang with a 540 hp motor that gets 6 mpg?
Had anyone who could see the forest for the trees said, but one day, gas may go to $5.00 a gallon, and had he been taken seriously, then they would have revamped the Taurus, at one time in the 90s, the best selling car in the U.S. Before you criticize this crystal ball, Ford and GM and Chrysler (all guilty of the same sins) are or were worldwide companies, and knew that in Europe people were paying the equivalent of $8.00 U.S. for gas even back in Taurus' day.
With Just a Pinch of Big Banks: Having worked with a large number of large (billions in assets) and small (millions in assets) banks from 1978 to 1995, even with the shenanigans of some CEOs and a few board members, the emphasis was on ROE and ROA. I still have the surveys that I did for 15 years to show that those two numbers determined the CEO's salary and benefits.
Bonuses? What bonuses? I heard yesterday that $6 billion of the package given to A.I.G. will be used for bonuses! Hey, you want a job that pays well, then you can have it, but you don't get a bonus no matter how much that may stifle the hiring process. Government employees don't get bonuses. You guys are working for me now, and the closest thing you're going to get to a bonus is to keep your job until the job is done.
How Will I Know? Yeah, just how will I know when the job is done? Well, first, A.I.G. and the rest at the trough will have paid back all the loans. That's easily measured, and we're going to be measuring on a quarterly basis, minimum. That's called a performance appraisal. Gee, maybe Culbert should be thinking in those terms.
Contracts? No, no contracts. Well, no contracts until the loans have been paid back and the individual senior managers has worked another year at least to prove that they can continue to make a profit. Then, they may well be on their own. If a new private board of directors wants to give them a contract with all the benefits that put them under to start with, then... NO, no more lousy management practices. The board, too, should be scrutinized and their compensation monitored. Believe it or not, that's the way it used to be done.
Severance Pay? No severance until the senior manager has been with the "failed" company ten years. No nothing if the company doesn't make it into the black. And sometimes, even if they should make it to profitability, the best we should offer are some nice parting gifts. Anyone at GM in 10 years at the "rank" of SVP or above, gets a new Cadillac that is powered by natural gas and weighs 1,600 pounds. (By the way, I need at least 42" of leg room.)
Who's the Boss? Well, it's the shareholders. That's us again, and until it isn't us, there should be some basic rules. I've already spelled out three of them. The rest have to do with plain, old basic management practices.
There are four management functions. Two of them are planning and control. It's about time that both the feeders (Congress) and the eaters (auto, insurance, mortgage and other bankers, and the rest of those lining up the minute a billion in bailout was mentioned) had to play by some common-sense directives.
Culbert's Second Fallacy Among Others: Culbert also states that, with performance reviews "personal development is impeded." How did he come to that conclusion? By another sleight of logic, that "people don't want to pay for acknowledging their need for improvement." Scientifically, this contention is known as "bull." If the appraisal process points out the areas in which improvement is needed, and the employee has a chance to improve - in other words, he hasn't been fired - then why would development be impeded?
Screw the impediments to personal development. Believe me, if an employee is known to have contributed to the corporate well-being and shareholder good, then s/he will be rewarded and, in such rewards, the individual will see his or her own development. Maybe they will have done so well that they will move on to other companies that do not measure performance.
Three, Four Five etc.: One factor which is not discussed is the fact that almost all persons who conduct reviews are themselves reviewed and if reviewed under a rational process, then most will become positive models for subordinates. Can I prove it? Not really because there are styles of management and, after having junked internal management training a quarter of a century ago, it's doubtful that the process is taught or learned by many in today's corporations.
Management vs. Leadership - Tie Game: Too often, we get management and leadership confused. I say you can't make a leader, but you can make a manager or at least make a poor manager better or even get rid of someone who has been deemed a poor manager.
Congress: I've already discussed management, now what about our Congress? Two things that have to be discussed. First, we can't seem to get rid of them. Second, our rating system - the vote - may be the best that the world has to offer, but there are some pitfalls such as not all constituents vote, and not all congress persons or senators' behaviors can be tracked. How well they've done for their constituents is often measured in terms of pork which is absolutely ridiculous, but has been going on in one way or another (substitute favors for pork if you will) for over 200 years.
In our performance reviews there is an objectives-setting process. Part of the objectives can be considered "oversight." How well does the Congress control? Well, while we can hold managers accountable for lack of control, we can't seem to do that with Congress, and since Congress doesn't seem to know what oversight is (or transparency or any of the other catchwords), CEOs have been getting away with outright theft of the public's trust and funds.
A few Congressmen wailed, but then having beaten the air with their flailing arms, felt that they had done enough. The rest of Congress made believe that it didn't exist.
Culbert wants to get rid of performance reviews. Well, take a look at Congress. We haven't reviewed them in years, not from a management standpoint. In September of this year they had a 9% approval rating! Nine percent! Okay, so I guess they have been rated, but for some odd - and I mean ODD - reason we keep electing them. We do so according to some "scholars" (the same ones that are our economists) because our representatives are good; it's everyone else's that are bad.
No Solution: I've got no solution to the latter problem. For companies, I suggest oversight and some regulation. At least go back to pre-1999 regulations. No more devouring your young and your competitors. No more underhanded dealings a la Enron and On and On. But what do we do with Congress? Well, I've always liked on-going performance appraisals. I said that in 1996, 2000, 2003, and 2005 before I gave up. But how do we review Congress? Weakly weekly. Maybe there has to be a national journal that comes out on Friday, a congressional review combined with "The Onion." Call it "The Garlic Clove" until everything smells better.
Maybe there's a way to protect the new congressional members from the old. Separate them so they don't become tainted. Too Jimmy Stewartish, huh?
Well since I have nothing long term, then may I suggest that what I'd like to see the termination of any senior manager hired by us - that's you and me, the government (and in the government, but I leave that to anyone smarter than me), the folks throwing money at these problems - who does not meet certain goals by certain dates. And that - goal setting - is the oversight I'm asking for. And termination without parachutes at all is what I call accountability, and that is what we deserve for the pain we're about to experience. I'm too damn old to wait for the megaliths we've created to become responsible for their actions, but I sure want them to explain to my kids and grandkids how they got us into these fixes. Right now I'm better on the smaller companies to get us out, but we're going to have to rethink economic models which never thought about performance reviews because no one - especially Culbert - seems to emphasize the one word, performance - more than any other.
Oh, and the Maverick: True I don't have a solution, but deep down, y'all know I'm right. See, I didn't tell you the rest of MJ's comments. She said she got rid of performance reviews, and uses "the 10-80-10" method. The lowest 10% of her employees get canned, and the highest 10% get rewarded. So, you see, she does use a review system of some sort. Just as Culbert confused performance reviews with the process, MJ confused them with the forms. Well my forms are the best ever devised, but if MJ's system works, that's fine. By the way, when you think of MJ, don't think Sarah Palin, think "The Amazing Mrs. Pritchard."
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