The performance review has to be one of the more studied aspects of modern working life, with the general consensus being that they are unloved by both managers and employees alike. Yet the fact that so many organizations continue to use them suggests that we cannot hold out for an ideal world where feedback is an ongoing and constant part of working life, and should perhaps instead focus on how to make this institution more effective.

A major criticism of performance reviews is that they’re often wholly subjective affairs, and if you are on the wrong side of your boss or indeed they’re simply having a bad day, then it can flavor the review you receive.

Many reviews seem to revolve around perceived effort levels and a recent study explores the impact this can have on employees. It analyzes the impact of being treated leniently or harshly in your review.

Two Sides of the Same Coin

The lab-based experiment asked participants to carry out a task for which they were given a performance target. They were given three types of contracts.

1. A fair contract in which there were no appraisal errors and the participant gets what they deserve.
2. A severe contract where the participant gets less than they deserve.
3. A lenient contract where the participant often gets more than they deserve.

The results are certainly interesting in that those in the overly severe scenario tended to react far worse than those in the overly lenient one, as participants revealed they impacted on their sense of fairness and justice in the organization.

This manifested itself in a number of ways. Whilst both over-rewarding and under-rewarding tended to result in a reduction in effort by the participants, it appeared that under-rewarding them had a much bigger impact. Indeed, this was found to contribute to as much as a 100% swing in output.

The results clearly show the sizeable impact the humble performance review can have on employee performance and should hopefully provide managers conducting these reviews with a degree of guidance on how they conduct themselves (especially when the things you’re judging employees against can be intangible). In such an environment, there is really no such thing as a perfect performance review, so the results suggest it’s better to err on the side of leniency.