Do negative performance reviews create a self-fulfilling prophecy?

Do managers who give consistently lower performance reviews negatively impact their employees' performance and engagement levels? A recent study from the Harvard Business Review says yes.

When asked to rate their direct reports on 360 evaluations, 50 managers at a multinational company were identified as positive-rating — they rated their direct reports significantly higher than their colleagues on a five point-scale. Researchers identified 31 managers who consistently rated their direct reports significantly lower than their colleagues.

While neither group said even 1 percent of their workers were truly problematic and needed significant improvement, nearly 14 percent of those working under negative-rating managers were identified as in need of improvement, compared to only 3 percent of those working under positive-rating managers.

The meaning of this data is not entirely clear. Could the positive-rating managers be inflating their employees' reviews, while lower ratings represent a more objective performance analysis? Or, could more positive reviews actually be making employees better, while more critical ones make them worse?

According to the Harvard Business Review, the latter is the more plausible explanation, as the psychological effect of these ratings was substantial.

After discussing their performance ratings, employees who received positive scores felt "lifted up and supported," and "that vote of confidence made them more optimistic about future improvement," according to the report. On the other hand, employees who received low scores from more critical managers felt "confused or discouraged — often both. They felt they were not valued or trusted, and that it was impossible to succeed."

Additionally, the study showed that these feelings had a direct impact on engagement: Engagement scores for those working under the negative raters were in the 47th percentile on average, whereas engagement scores for those reporting to positive raters were in the 60th percentile on average.

Many of the negative-rating managers said they are critical of employees and give lower ratings because they want their workers to know they have high expectations. The "easy graders" also had high expectations, but instead of attempting to motivate their employees with negative feedback, they aimed to encourage them by showing they have confidence in them.

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