Designing an Engineering Performance Management System from Scratch
Formal performance reviews are the worst method for evaluating your workforce that has ever been tried, except for all the others.For me, performance reviews are the single most demoralizing aspect of working at a large company. They are doubly demoralizing because I can see so many things wrong with them, but also can't imagine any system that would work better.So what's wrong with them?1. Over the long term, they incentivize people to work on things that have easily measurable short term costs and benefits. More difficult to measure costs and benefits get ignored. They also encourage sunk-cost fallacy. In almost any company, you're better off, at least in the short term, if you ship something that turns out to be a huge waste of resources later on, than if you make the decision "this isn't turning out the way we wanted, we should just cancel this project".2. They pretend to be a relatively objective system, when in fact your performance rating at most companies is strongly (though not entirely) dependent on how your manager views you. Attempts to lessen the impact of point 1 above will generally increase the impact of this point. Research suggests that most of what passes for rational justifications are made up after the fact to support gut-level emotional decisions.3. They replace intrinsic motivation with extrinsic motivation, which at least some research has shown can lead to much less durable motivation over the long run.At one point I was very enamored of the way Valve does things, but now it seems that that sort of management approach produces super toxic cultures in the long run.Ultimately it seems like the only way to get away from this stuff is to work for yourself or in a very small team with trusted partners.