Home / HR Book Series / Professor Armin Trost: Why Annual Performance Review Jeopardizes Good Management

Professor Armin Trost: Why Annual Performance Review Jeopardizes Good Management 62

This week we are honored to have Professor Armin Trost share some insights with us of his new book on the challenging topic of performance.

Employees and managers talking to each other is a good thing.

It is even better if it’s done every so often in a professional and reasonably structured manner. Discussions help to build mutual trust and clarify mutual expectations. Learning requires feedback. Feedback requires dialogue. If you as an executive appreciate your staff, you will talk to them.

And because we believe in all this so much we have declared the annual performance review mandatory. Not only that. We have to define how such meetings are to be performed correctly, what the relevant content is, and how to document the results. Through training, forms, and guidelines, we have enabled managers to conduct annual performance reviews exactly as we have envisioned it.

We were guided mostly by unspoken assumptions.

  • “It is a manager’s essential task to give employees regular feedback.”
  • “Expectations between managers and employees need to be determined in a dialog.”
  • “Executives can best judge the performance and skills of individual employees.”
  • “The manager is in the best position to go over development needs with an employee.”
  • “It is the job of a manager to communicate objectives to the lower levels through joint dialogue.”

Isn’t behind all this a deeply hierarchical understanding of leadership and organization?

The boss with superiority both in terms of formal position and and competence. Coordination of objectives coupled with assessment, issuing orders, and control. The division of labor and alignment of individual performance with respect to the overall strategy from top to bottom.

Most of us have come to appreciate the great management visionary Douglas McGregor. Of course, we have prescribed to his Y theory according to which people are inherently motivated and want to assume responsibility. Our well-intentioned management tools such as the annual performance review bring about the contrary, however. We force executives to not only assess their employees but to also document these judgments and forwarded them to a central instance, mainly HR. The employee’s future salary and even their future careers are based on it.

By forcing managers to do so, we are turning them into judges.

However, we actually increasingly seek managers who coach their employees, treat them as a partner and at eye level. We want a relationship between employee and manager that is based on mutual trust rather than formal power and superiority.

And so we should, because our modern world of work no longer allows for anything other than that, due to its increasing complexity, uncertainty, and dynamics. The innovativeness, ability to change and thus the competitiveness of our company needs fewer bosses but more coaches, mentors, and enablers that lead as partners. The esteemed McGregor already said over 50 years ago, rightly so, that the role of a coach and a judge are not compatible. By turning managers into judges with the annual performance review, we actively prevent coaches and yet that is what our company really needs.

Managers who lead on a partner-level feel this conflict.

364 days of the year they lead with trust at eye level.

They aim their focus less on individual performance of individuals but rather on the shared responsibility of the team.

They see themselves as part of the team.

But then, on the day of the annual performance review once each year, they must wear the coat of a judge.

They know that at the end they have to deliver a completed form, which will decide on the salary and the future of that employee. Anyone who has been leading as a partner all year, will now do their all to keep the threat of this procedure, which is often considered to be bizarre, to a limit. They are aware that a formal performance review can prevent open dialogue not only at the moment but also endanger it permanently. You want to be a coach, partner, enabler but the personnel department requires a judge.

A nearly unsolvable challenge. It may sound preposterous, but there is great risk of jeopardizing good and modern management with a well-intentioned management tool, such as the annual performance review.

The traditional boss in a hierarchical world will see no problem with the annual performance review. To conduct the review as specified in the guidelines corresponds to his understanding of leadership and obedience.

For the coach, however, just the mandatory nature of the annual performance review itself eludes a conversation based on trust.

“Are we doing this because we want to or just because we have to?”

A small analogy may illustrate this:

There is a man who has been giving his wife flowers every weekend for many years. He does this because he loves her deeply. His wife not only appreciates this gesture, but it makes her especially proud. He is not obligated to do this and she knows that he knows that. That makes this weekly proof of love so special and valuable. Meanwhile the federal government is increasingly concerned about the growing divorce rates. Divorce is a social and socio-political problem. After intensive examination of the question of what life partners in successful marriages do different than partners in failed marriages, the government passes a law. The law requires all husbands to give their wives a bouquet of flowers once a week.

What is the loving husband going to do now?

Or for that matter, what is the manager going to do who speaks with his staff from the perspective of a coach and will now be forced to do so formally?

Would you like to learn more about performance management – get Professor Armin Trost’s (e)book online – Below Expectations: Why performance appraisals fail in the modern working world and what to do instead.


(c) New To HR.

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Armin Trost

Armin Trost

Professor Armin Trost lectures and researches at the HFU Business School in Furtwangen, Germany, focusing primarily on talent management, employer branding and the future of work. He previously also had a professorship at Würzburg University of Applied Sciences, and was head of worldwide recruiting at SAP for many years. He is a long-time trusted advisor for companies of all sizes and industries in matters relating to strategic Human Resource Management. Not only is Professor Trost known as the author of numerous articles and books, he is also a trend-setting speaker at reputable conferences.

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