By Jonathan H. Westover, PhD
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Abstract: This article argues that self-referenced performance reviews are more effective for employee motivation and development than traditional peer comparison reviews. It draws on self-determination theory to explain how comparing employees to their peers undermines the psychological needs of competence, autonomy, and relatedness, diminishing intrinsic motivation. In contrast, self-referenced reviews that focus on individuals' past performance, strengths, and areas for growth better support these needs. Evidence suggests this approach fosters engagement and productivity by promoting a growth mindset oriented toward continual self-improvement rather than competition. Additionally, qualitative case studies of organizations that shifted to a self-referenced review model found increased morale, collaboration, and business outcomes as employees concentrated on progress within their control rather than relative standings. The article concludes self-referenced reviews align with human motivation science and are more constructive for building high-performing, cohesive workforces.
All organizations use performance reviews to manage and develop their employees. However, traditional performance review approaches that compare employees to their peers can damage motivation and productivity. Research shows people are more motivated by focusing on self-improvement rather than outperforming others.
Today we will argue that self-referenced performance reviews that compare employees to their past performance, strengths, and growth areas are more effective for cultivating engaged and high-performing teams.
Research Foundation: Self-Determination Theory
Self-Determination Theory (SDT) is a well-established framework for understanding human motivation (Deci & Ryan, 2000). SDT posits three innate psychological needs that drive human growth, integrity and well-being: competence, autonomy and relatedness. Traditional peer comparison reviews undermine these needs by emphasizing social ranking over personal mastery. Comparing individuals to their peers diminishes a sense of competence, as performance is seen as contingent on others' variable skills. It also reduces autonomy, as employees feel controlled by external forces like coworkers.
In contrast, self-referenced reviews foster these needs. Comparing performance to past achievements supports feelings of competence by emphasizing continual learning over absolute skills. Focusing on strengths and growth areas within an individual's control preserves autonomy. And discussing goals as a collaborative process between manager and employee strengthens relatedness. Many studies show self-referenced reviews boost intrinsic motivation more than social comparisons (Van Yperen et al., 2014; Zhan et al., 2018).
More Effective Feedback
Self-referenced reviews provide clearer and more targeted feedback for improvement. Discussing accomplishments since the last review and delineating new strengths and areas for development establishes a personalized baseline. Goals can then be set based on moving that individual forward. Peer comparisons often involve vague assessments like "higher/lower than peers" without context of past performance.
For example, at a tech startup, performance discussions compared coding abilities to other engineers quantitatively using relative metrics like bugs per line of code. This opaque feedback frustrated developers and diminished motivation to improve. Shifting to qualitative self-assessments highlighting individual growth in areas like collaboration led to more engagement and higher code quality. By grounding feedback in each person's trajectory, self-referenced reviews foster a growth mindset.
Increased Motivation and Productivity
Comparing employees to peers promotes a performance-over-mastery orientation where the focus is outward externally ranked skills rather than developing intrinsic strengths. This jeopardizes motivation critical to performance. Research shows social comparison triggers competition and anxiety that undermine well-being and productivity (Turner & Brown, 1978; Suls & Wheeler, 2012).
For instance, at a healthcare nonprofit, department-level benchmarks led to divisions vying for higher ratings, with some inflating stats to appear more successful. Introducing one-on-one reviews centered on goal progress rather than competitive comparisons restored collective purpose. Surveys found morale and engagement increased significantly as employees concentrated on excellence within their control. A retail chain also found self-referenced reviews correlated to reduced staff turnover and higher customer satisfaction scores.
Strengthened Relationships and Culture
Peer comparison fosters an individualistic and status-oriented culture where people see coworkers as opponents over allies. This damages relationships critical to collaboration and organizational success (Brewer & Gardner, 1996; Taylor & Lobel, 1989).
For example, during layoffs at an automotive manufacturer, divisions pitted themselves against each other, protecting their turf at the expense of the whole. The perception of "us vs. them" undermined cooperation. Conversely, self-referenced reviews cultivate interdependence by emphasizing collective achievement of goals.
At an architecture firm, switching from competitive rankings to developmental conversations strengthened cross-team problem-solving. Managers coach employees into stretch roles by identifying transferrable skills rather than comparing raw talents. This cooperative culture has led the organization through industry turbulence, retaining top talent through challenging times.
Conclusion
Peer comparison performance reviews negatively impact motivation, productivity and relationships fundamental to organizational health. Research demonstrates people are driven more by continual self-improvement and mastery than outperforming others. Self-referenced reviews align with fundamental psychological needs, clarifying expectations and fostering autonomy, competence and collaboration. Though initially unfamiliar, organizations that shift focus from external rankings to internal growth see increased engagement, retention and business outcomes. Comparing employees to past achievements and their own upward trajectory is far more constructive for cultivating excellence within high-performing, cohesive teams.
References
Deci, E. L., & Ryan, R. M. (2000). The "what" and "why" of goal pursuits: Human needs and the self-determination of behavior. Psychological inquiry, 11(4), 227-268.
Turner, J. C., & Brown, R. J. (1978). Social status, cognitive alternatives and intergroup relations. Differentiation between social groups: Studies in the social psychology of intergroup relations, 201-234.
Suls, J., & Wheeler, L. (2012). Social comparison theory. In P. A. M. Van Lange, A. W. Kruglanski, & E. T. Higgins (Eds.), Handbook of theories of social psychology (Vol. 1, pp. 460–482). Sage Publications Ltd.
Van Yperen, N. W., Hamstra, M. R., & van der Klauw, M. (2011). To win, or not to lose, at any cost: The impact of achievement goals on cheating. British Journal of Management, 22(S1), S5-S15.
Zhan, Y., Le, H., & Bergener, D. (2018). Comparing apples to oranges: The influences of different performance assessment frames on intrinsic motivation. In Academy of Management Proceedings (Vol. 2018, No. 1, p. 17330). Briarcliff Manor, NY 10510: Academy of Management.
Brewer, M. B., & Gardner, W. (1996). Who is this" We"? Levels of collective identity and self representations. Journal of personality and social psychology, 71(1), 83.
Taylor, S. E., & Lobel, M. (1989). Social comparison activity under threat: Downward evaluation and upward contacts. Psychological review, 96(4), 569.
Jonathan H. Westover, PhD is Chief Academic & Learning Officer (HCI Academy); Chair/Professor, Organizational Leadership (UVU); OD Consultant (Human Capital Innovations). Read Jonathan Westover's executive profile here.
Suggested Citation: Westover, J. H. (2024). Comparing Apples to Oranges: Why Self-Referenced Performance Reviews are more Effective than Peer Comparisons. Human Capital Leadership Review, 11(4). doi.org/10.70175/hclreview.2020.11.4.7
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