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Reducing Bias in Performance Management

By Betterworks
September 29, 2021
4 minute read

Effective performance management is absolutely critical for organizational success. And yet, most of the formats, practices, and processes we routinely use to measure and evaluate employee performance are deeply flawed. 

The annual review is particularly vulnerable to distortion from bias, in ways that can be especially harmful to workers from historically marginalized groups.  

One study by the Women’s Leadership Lab at Stanford found that how performance evaluation forms are written can invite bias. For example, when performance evaluation forms ask open-ended questions, male managers were less likely to offer detailed, actionable feedback to the women on their team than to their male reports. These types of discrepancies can lead to less useful evaluations for people from historically marginalized groups.

Some common performance management biases include:

  • The horns effect/halo effect: Here, one trait that a manager perceives as negative skews the entire evaluation negative. Conversely, one positively perceived trait can skew the evaluation positive.
  • Recency bias: The performance from immediately before the review colors the manager’s perception for the entire period, resulting in skewed evaluation data. The less frequent the evaluations, the more problematic this becomes.
  • Leniency bias: Managers give satisfactory ratings to employees, even if their performance isn’t up to par.
  • Central tendency bias: When given a neutral option on a 5-point scale, managers often gravitate towards that rather than making a judgment on an employee’s performance.
  • Identity biases: These include implicit racial or gender biases that could impact how a manager reviews their reports.

If these biases are left unchecked, you’ll be left with a performance management system that not only fails to achieve its main purposes — keeping your people aligned on the right activities and identifying high performers — it actually hinders those objectives.

In many ways, performance management itself is an outdated concept. (We prefer a performance enablement model.) In the meantime, though, consider these three best practices for reducing bias in performance management.

Implement Collaborative Goal Setting and Management

Although implicit bias colors everyone’s perceptions of the world around them, we can limit its impact in the workplace. 

A collaborative goal setting and performance management process, such as OKRs, encourages managers to work together with employees to design goals that drive the business forward. When people from different backgrounds work together toward a shared goal, they’re more likely to see each other as whole people rather than as stereotypes, regardless of their initial preconceptions and biases.

Collaboration doesn’t have to stop there. Train managers to perceive employees as partners working toward shared business goals. Employees have their individual objectives, but managers play a pivotal support role in helping their reports achieve their goals. 

Without this collaboration process, managers may be more likely to think negatively of an employee who is different from them. This can lead to biases clouding a manager’s judgment and putting the employee at an undeserved disadvantage.

Collaboration drives trust and helps managers build better relationships with their employees. And the better their relationship, the more effective and targeted the frequent feedback will become. 

Frequent feedback is an essential component of reducing bias in performance management, but it requires a collaborative mindset. Receiving feedback can make employees feel vulnerable. When both parties approach frequent feedback conversations as a team working toward the same goals, those conversations can become empowering.

Additionally, managing performance in the flow of work minimizes recency bias, which is a common issue with annual reviews. This happens when managers focus only on the most recent events as they craft their evaluations. 

Collaborative performance management presents other business benefits, too. When you encourage your team members to get creative, they might find more innovative ways to drive business results than assigning goals from the top-down.

Design a Transparent Performance Appraisal Process

Transparent processes are key to reducing bias in performance management. 

Transparency helps managers stay aware of who they’re giving their attention to and who’s receiving the most and the best feedback. The high performers might be at the top partially because they’re receiving more frequent, better feedback than their peers. 

Empower managers to easily record notes during performance conversations, including those that occur in the flow of work. When every part of the performance appraisal process is recorded, managers are more likely to be aware of their own biases in action — especially if they know that other team members will be reviewing that data. Having all of those interactions and conversations on record can also help protect you from and mitigate discrimination claims.

Performance management software can help enable transparency. Implement intuitive, easy-to-use software that allows managers to track interactions with their team members — whether those are informal performance feedback conversations or formally scheduled performance appraisals. 

Managers might initially push back against filling out extra “paperwork,” especially during informal conversations. But keeping detailed performance data will help them identify their reports’ strengths and weaknesses so they can provide more targeted support.

In addition to reducing bias in performance management, transparent performance management processes also empower both managers and employees to track their progress over time. Employees will be able to see a clear record of their own growth. Seeing tangible gains over time can be very empowering for employees and can significantly improve employee engagement and company culture. 

Monitor Employee Performance Evaluation Data

Tracking employee performance data allows HR to compare trends in performance management against your workforce’s demographic information. This way, you can identify patterns in the quality and quantity of feedback that people are receiving across your organization.  

Reviewing performance data can also help HR track how often managers recommend diverse employees for training opportunities or promotions. While many companies make it a priority to attract diverse talent externally, there is typically less effort put toward upskilling and promoting diverse talent once they’ve entered the workforce.

Seeing the data laid out also helps human resources teams spot where bias occurs and where biases are appearing most frequently. If the data shows that most managers rank their employees as “neutral” on a five-point scale, for example, the central tendency bias could be at fault. Biases will show up more clearly in aggregated data. 

Monitoring that data can help your HR team stay on top of your performance management processes. If you’re seeing the central tendency bias appearing a lot, for example, consider scrapping a five-point rating system in favor of something more descriptive. The aggregated data provides a granular level of awareness and empowers HR to reduce bias in performance management. 

You can develop processes to minimize the effects of bias in your organization. When biases are minimized, HR collects more accurate performance data to identify and reward the company’s true highest performers. Rewarding the right people sets a positive example for the rest of your workforce. It drives a better culture and fosters innovation.
Fostering a collaborative mindset, empowering transparency, and finding opportunities for improvement don’t just reduce bias. It also drives your business forward by empowering all of your employees to reach their full potential at your company.