From Bias to Balance: Embedding Ethics Into the Performance Review Process

Elizabeth Pittelkow Kittner CFO and Managing Director, Leelyn Smith LLC
Exploring Ethics in Business & Finance Today

Performance reviews can affect culture, compensation, and careers. When ethics are integrated into a company’s performance review process, it encourages fairness and promotes positive employee behaviors.

To ensure fairness and integrity, employees should be evaluated based on consistent, job-related criteria, and the review process should be transparent across the organization. This process includes having clear and transparent job descriptions, reporting structures, and performance expectations.

Reviewers also have a responsibility to uphold ethical standards in both the writing and delivery of feedback, demonstrating respect for each person’s role in the organization and their potential for growth and development. Additionally, establishing a committee to oversee performance reviews can further strengthen accountability and help maintain ethical practices across the organization.

Performance Review Pitfalls

One of the best ways to ensure ethical standards are upheld in the performance review process is to make reviewers aware of the potential behavioral pitfalls that can occur. Here are three of them:

1. Conflicts of interest: Conflicts of interest can come into play when there are personal relationships or organizational politics involved. For example, it is generally advantageous for a supervisor to give a positive performance review, especially if that person takes work from the supervisor’s plate, because it will reflect positively on the supervisor to have staff performing well.

2. Biases: Biases are judgments that can infiltrate the opinions of reviewers. Three common ones include:

• Halo/horns effect: This bias relates to a supervisor’s own partialities for good traits or bad traits. For example, a supervisor may prefer to work with introverts more than extroverts and may evaluate staff based on these preferences.
• Recency bias: This bias relates to people who place more weight on more recent activities compared to events that took place earlier in the review period. This practice could be appropriate if staff improved over time, and it could be unfairly applied to someone whose larger projects occurred earlier in the review period.
• Primacy bias: This bias is the opposite of recency bias. It relates to a supervisor’s first impression of an employee that shapes their views of that employee. For example, if an employee makes a good first impression, the supervisor may not record lower performance items over time, and conversely, if an employee makes a bad first impression, it may be difficult for the supervisor to notice and record improvement.
• Overemphasizing results over conduct: This practice is easy to do and can encourage unethical behavior to achieve a goal instead of achieving it ethically. When organizations prioritize revenue, profitability, or productivity without examining the means to achieve these metrics, a “results over culture” imbalance can develop. This imbalance can erode trust, morale, and organizational reputation. An example of this behavior would be a manager who consistently delivers on-time results and then also pressures the team past healthy limits. This “win at any cost” approach can lead to employees feeling undervalued, underappreciated, and distrustful of the organization.

Strategies That Promote Ethical Performance Reviews

Despite these potential pitfalls, there are thoughtful ways in which organizations can structure performance reviews to promote an ethical review process. Here are four strategies to consider:

1. Build a culture that supports ethics and psychological safety. Help staff feel comfortable speaking up about fairness and other concerns. When people feel supported in their roles, they are more likely to speak up when they see something they would like improved within the organization, which helps to make the organization better. As part of safeguarding culture, it is important to document conflicts of interest to understand individual incentives and then put controls in place to promote fairness, like segregation of duties and dual reviews. Other ways to build a healthy culture include encouraging leaders to model behaviors consistent with the values of the organization, recognizing individuals and teams who are demonstrating the values of the organization, and providing ways for people to speak up when they have questions about an initiative or project.

2. Provide training. It can be beneficial to offer supervisors training on how to set goals and expectations for their team members. Supervisors should be encouraged to hold regular one-on-one meetings with their teams to discuss performance throughout the year instead of only during review times. Additionally, provide bias training for the whole organization so people can be aware of the biases that exist and can work on avoiding them. Supervisors should also be taught to deliver feedback honestly and incorporate development plans after each review to show that the feedback leads to action. Understandably, difficult feedback can be tough to communicate. In her book, “Dare to Lead,” author Brené Brown notes that delivering difficult feedback requires clarity: “Clear is kind. Unclear is unkind.” As we think about this concept in the context of performance reviews, we should help people feel comfortable sharing difficult feedback by expressing the importance of honesty and providing coaching and practice.

3. Implement a system that incorporates multiple reviewers and 360-degree feedback. Having multiple reviewers allows an organization to gather more information about a person’s performance, including feedback from colleagues at the same level. Different perspectives help balance subjectivity and fairness in the review and evaluation process. Group discussions about individuals may also help determine a fuller picture of someone’s performance. Anonymous feedback mechanisms are helpful too, especially in a 360-degree review process. For staff receiving feedback, it may also be helpful to prepare them to receive the feedback with curiosity instead of defensiveness; pausing and reflecting before responding is a skill that benefits people at all levels. Individuals should also feel that they can respond to feedback professionally and through the correct channels if they do not agree with the feedback.

4. Use artificial intelligence (AI) responsibly. AI is making its way into the performance review process. In fact, some organizations have found it helpful with phrasing and overall consistency across reviews. As with many processes involving AI tools and other technologies, data privacy should be considered before implementation to ensure private information remains confidential. If using AI to ensure review accuracy, human review and oversight processes should be securely in place.

Overall, ethical performance reviews signal a healthy organizational culture. When conducted with fairness and transparency, performance reviews can build trust, strengthen employee engagement, and create genuine excitement for the future.

For organizations that prioritize ethics in their review processes, balance should replace bias and honest discussions can encourage people to achieve results in the right way, which will support individual and organizational success.

Related Content:

• Is Remote Work Driving Performance Evaluation Bias? A new study highlights how remote and hybrid workplace settings can create unintentional performance evaluation bias. Here’s what accounting firms can do to fix it.
• Ethics Against the Clock: Maintaining Integrity While Meeting Deadlines: Doing what is right, even during difficult or inconvenient times, is a true reflection of ethical leadership.