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Published: May 6, 2011

 
 

How Performance Reviews Pay Off

In the long term, however, all forms of the performance feedback used in the study helped. The researchers found that both groups receiving feedback boosted their performance over the course of the month in comparison with the control group; the positive group’s productivity was up approximately 20 percent and the negative group’s about 30 percent. So although couching an employee’s performance review in positive terms may not make a difference the next day, it will over time. And whereas giving an employee indirect negative feedback can hurt performance in the short term, over the long term it’s still better than no criticism at all.

The researchers acknowledge that the study’s setting — a Japanese bank — may raise questions about whether the results are widely applicable. Because reputation and saving face are particularly important in Japan, employees there might react more strongly to criticism than workers in other societies. But the authors point out that the feedback was private and did not include specific rankings. In addition, because the company had no history of laying off employees for inadequate performance and offered no bonuses for working harder, the researchers could focus solely on the effects of the feedback itself. These two factors make the findings relevant beyond Japan, the researchers say. The researchers also believe the findings are applicable beyond job settings that are highly routine and quantifiable.

The results show that although regular feedback can improve worker performance over time, the pace of change can vary. Managers shouldn’t expect to see an immediate increase in productivity from their best workers. As for the rest, indirect praise isn’t likely to produce an immediate uptick, and indirect criticism may actually make things worse for a while. Telling underperforming employees that they are in the bottom segment — which, of course, could be defined more broadly than the “bottom 10” — offers the best chance of getting a quick and dramatic improvement.

Bottom Line:
Managers should consistently tell their employees where they stand: Whether presented in positive or negative terms, feedback tends to improve performance over time. In the short term, the biggest improvement may come from workers who are told they are in the bottom rankings.

 
 
 
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