One of the big breaks in my career was being hired as the Chief Operating Officer (COO) of a small organization. The Board of Directors recruited me after recognizing the CEO was one of those industry visionary types more suited to being the face of the organization, rather than running day-to-day operations.

Those day-to-day operations included evaluating employees, and the Board asked me to implement a formal performance review system. The organization I just left had a system I'd used for four years, and it was pretty typical: Once a year employees were given a score of 1-5 (1 being the worst, 5 being the best) on a list of tasks and behaviors. The list of scores were then averaged out to give the employee their final score.

I remember the first year I evaluated my staff using this system.

Our division's receptionist, Lorraine, had done an exceptional job. I gave her a 5 on customer service. My boss--the COO of the organization--had to approve my evaluations, and when he saw that 5 he gave me this directive:

"No one gets a 5."

"Why?" I asked.

"Because if you give them a 5, they'll stop trying."

The trick, I learned, was to keep employees from wanting to kill themselves (i.e., don't give them a 1--fire them before that happens) while also not letting them think they could be valuable to another employer ("No one gets a 5").

Keep them right in the sweet spot: 3.25 - 3.75.

In my first year, I thought the system was stupid.

By my fourth year, it was a way of life.

And when the Board of Directors at my new employer asked me to implement a formal performance review, I went with what I knew--and they liked what they saw. It looked like every other performance evaluation system they'd seen. But when I showed it to the CEO, he gave me different feedback:

"That's stupid. Why would you do that to people? If they're doing a good job, tell 'em. If they're not, tell 'em."

I wanted to explain to the CEO all the benefits of this system, and how making sure no one ever got a 5 kept the hamsters running hard on their wheel, so to speak.

Instead, I took a breath and thought about what he'd said.

I came to the conclusion that he was right: This type of performance evaluation was stupid. I couldn't remember a single employee improving his or her performance based on feedback given through this mechanism. The entire performance evaluation process always had a confrontational tone to it. And as a supervisor, I disliked it almost as much as my employees did.

I never knew how to determine the difference between a 3.5 and a 3.75. I thought the whole "No one ever gets a 5, or they'll stop trying" was one of the more illogical things I'd ever heard.

The entire exercise was dehumanizing, and as far as I could tell had no relationship whatsoever to actually improving performance. If that's the case, why did we continue to do it? Out of habit. Because it was hard to think of something better.

Habit was the same reason I was implementing it at my new employer. I was too lazy to think of a better idea.

I needed to change my ways.

Rather than use that system, I implemented a more informal, regular system of feedback based on actual conversations between two people, rather than arbitrary numbers. It wasn't anything revolutionary, but it was a more human way to give employees a sense of how they were doing.

It worked really well.

In fact, I would give it a 4.75.