Ask HN: Should pay be based on Performance Reviews?

[tcgv]

Hi there!

After a couple of years as a senior engineering manager running bi-anual performance reviews within my department (I'm responsible for managing four squad managers), which are linked to pay raises and promotions, I've started noticing some patterns, such as:

- A tendency for managers to gear up more heavily with negative rather than positive feedback prior to reviews to reinforce their evaluations

- A tendency of some reportees to play the performance review game, focusing on keywords and using selected past experiences to justify high performance behavior

- High expectaions of raises/promotions every performance review, i.e. twice a year

- Anxiety and frustration related to recurrence and size of pay raises and promotions

- Subpar experience for the team. I would like for them to have a more fufilling and impactful performance review experience.

Some references suggest to separate discussions of raises and promotions from performance review, but the literature feels lacking more real world examples:

- https://www.gallup.com/workplace/249332/harm-good-truth-performance-reviews.aspx

- https://hbr.org/2014/01/stop-basing-pay-on-performance-reviews

So what's your take on this? Do your company separate them? What would it look like? Are you having a mostly positive or negative performance review experience?

Thanks in Advance.

[alex_lav]

> - A tendency for managers to gear up more heavily with negative rather than positive feedback prior to reviews to reinforce their evaluations

> - A tendency of some reportees to play the performance review game, focusing on keywords and using selected past experiences to justify high performance behavior

Creating a system that defines pay will result in employees optimizing around that system.

> - High expectaions of raises/promotions every performance review, i.e. twice a year

> - Anxiety and frustration related to recurrence and size of pay raises and promotions

All of life is more expensive than last year and the year before; company profits still quite high.

> - Subpar experience for the team. I would like for them to have a more fufilling and impactful performance review experience.

They're there for the pay. Unless the performance review results in more money and/or a better life, you're not going to get a "fulfilling and impactful performance review experience". This is coupled by new hires generally getting comp offers at or above current staff comp rates. If you want people to feel good about their role, you have to pay them at or above what they'd make leaving for somewhere else.

> Are you having a mostly positive or negative performance review experience?

I've never really seen a process that wasn't toxic and anti-employee. Performance review biases towards managerial traits and away from individual contributor traits, IME, such that individual contributors that aren't interested in management score lower than aspiring managers, even if their actual job is unrelated to management. Similarly, performance is measured against The Next Role as opposed to the current job. As in, you're compared to the role above yours, suggesting you'd want it, rather than your actual role. You could look like a great employee if you only cared about your current job, but performance reviews are generally (kind of uselessly) focused on promotion. Coupled with the aforementioned managers' track, it's usually a pretty shitty experience.

[tcgv → alex_lav]

> They're there for the pay

That's a key factor, indeed. I also believe in trying to provide a good work experience for helping people grow professionally not only at our company but something they can bring to their next companies.

> Similarly, performance is measured against The Next Role as opposed to the current job (...) suggesting you'd want it, rather than your actual role

Good point. I also noticed this general feeling of reportees that if they have a good review for their current role they'll often feel like it wasn't a good review at all because everyone is always aiming for the next role. I always make an effort to congratulate everyone that did a good job in their current role to compensate for this.

[austin-cheney]

Standardized pay, like at universities and the military, has a positive correlation to retention. Though the pay is dramatically lower they bleed talent far more slowly than equivalent tech jobs in the private sector.

The only exceptions I have seen to this are military programmers with experience in Python and C lang or experience in cloud architecture. Those guys are leaving the military as early as possible for more than double pay without having to deal with beginner bullshit like tech stacks or frameworks.

[2rsf → austin-cheney]

> Standardized pay, like at universities and the military, has a positive correlation to retention

How does it correlate with quality? retention comes from being comfortable to be.. lazy- you can do the minimum not to get fired and still get paid.

[Sevii]

I've never seen the point of performance reviews for me as an employee. Either they are pointless or something I have to game for promotions. If performance reviews are factored into promotions, you have to game the books to ace them. If performance reviews aren't relevant for promotions, what's the point exactly? Positive and negative feedback don't help me when it's about things that happened six months ago. A 1.5% raise could just be an email.

[2rsf]

There is no simple answer. Companies like Microsoft prove that a simple performance to pay to promotions mapping doesn't work well, is easy to game and can lead to frustration. This is especially true for large companies that try to keep everything leveled across the company.

On the other hand signoring performance altogether can lead to laziness, and doing the bare minimum at your work.

Many places choose some middle way, but that leads to other problems like unfairness and involving luck in your promotion or salary.

[ActorNightly]

Performance reviews are a waste of time.

Standardize pay for everyone. If someone does something "extra" with way more work, then independently to that person give them a bonus (i.e don't make bonuses a regular part of salary), or if they continue to show exceptional qualities, make them a lead and give them a pay bump.

[wmhmccarty]

Are you having a mostly positive or negative performance review experience?

Current job, fine. But a while back this happened:

I was working for a BigTechCo who shall remain nameless. At my first performance review near the end of year one, I was rated "Meets Expectations" on a scale that went "Needs Improvement" -> "Meets Expectations" -> "Exceeds Expectations". OK, fair enough.

At the end of year two, my manager calls me in for a performance review, and proceeds to tell me:

A. he thinks my performance has improved from the previous year (when I got a "Meets Expectations")

B. my evaluation this year is "Needs Improvement".

Huh??

Yeah, that's what I thought too.

The purported explanation was that he changed the criteria he judged me by. Mainly that meant that instead of being compared to my peers, I was compared to people in the next higher band, managers (I was an IC), and people who had been with the company 15+ years.

Huh?????

Yeah, that's what I thought too.

Still, the only real fallout from this would nominally have been a slightly smaller bonus, and a bruised ego (I never get "needs improvement" ratings, damnit!). But I could live with this and go on.

And then we got a new VP of our group, and this guy apparently has some hard-line "I only want TOP performers on my team" shtick. So he goes over all the department performance ratings, and decides he can't have me around. So I get PIP'd.

Now here's where this gets even more fucked up. I started looking for a new job immediately (because we all understand that a PIP is generally a "soft firing"). But I knew I had some time and could afford to be selective, so I didn't rush out the door. So I hung around until the end of the PIP period... and MET all of their criteria, by their own admission. My manager signed off on my having successfully met the PIP criteria and everything. And then a few days later he came back and said "the higher ups want you to do a second PIP". LOLOLOLOL. Luckily by then I was just a day or two away from having an offer from another company, so like three days later I go to my manager and tell him "Yeah, I'm out."

But seriously, if anybody doubted that the whole PIP thing is bullshit, that should serve as a pretty strong indicator. It wasn't about me improving my performance, it was about somebody deciding they wanted me gone and they were going to get their way one way or another. I guess if I'd stayed and successfully completed the second PIP they would have just made up some bullshit and fired me outright. Or somebody would have put their finger on the scale to make sure there would be not possible way to successfully complete the second PIP.

Anyway, the moral of this story is, performance reviews are generally a political game playing process and PIP's are bullshit.

[tcgv → wmhmccarty]

> The purported explanation was that he changed the criteria he judged me by

> "the higher ups want you to do a second PIP"

That's rough!

> Luckily by then I was just a day or two away from having an offer from another company

Nice.