Talent Management

The Most Important Conversation? It’s Sure Not the Performance Review

Performance reviews

It’s a lesson I learned while I was working toward an MBA: the most powerful business lessons aren’t the stories of success, but the stories of failure.

Yes, as good as it is to hear about Herb Kelleher and how he built the great workforce culture at Southwest Airlines, I got a lot more out of studying “Chainsaw” Al Dunlap and all the bad stuff he did while systematically tearing down companies (like Sunbeam) and their culture.

This is also true of business wisdom; I always learn a lot more from the bad advice I see popping up from so many so-called experts who have curious notions about what really matters when it comes to managing people and leading a workforce.

Is the performance review the best feedback?

Here’s a good example of this. The Sunday New York TimesCorner Office” column recently talked to Deborah Farrington, described as “a founder and general partner at StarVest Partners, a venture capital firm in New York.” Here’s the management and leadership wisdom that she offered up that left me shaking my head:

I had a terrific boss at Merrill Lynch who taught me that the most important conversation you can have with anybody who works for you is the performance review. Because people, especially those who are goal-oriented and very high-achieving, want feedback. They need that. And my boss made me feel that nothing was more important than this conversation. When you’re young, you know you can improve; you want to improve. You need feedback, and you need constructive feedback.”

Well, I agree with one thing — yes, people really do need constructive feedback. No doubt about that, but I wonder — what kind of manager or leader can sit with a straight face and say “the most important conversation you can have with anybody who works for you is the performance review?”

I don’t know if that’s the worst management advice I’ve ever heard, but it’s on my Top 10 list. And hearing it sure does make me long for someone schooled in the management wisdom of the late, great Peter Drucker.

Here’s why it’s such bad advice: Because performance reviews don’t really provide very good feedback.

“I wouldn’t do annual reviews”

I was always taught that performance reviews are the culmination of all the feedback, discussions, and focused conversations you have with someone over a specific period of time. In other words, the actual performance review should simply be a recap of all the other regular feedback you have been giving your employee over time.

If you are counting on the performance review — something that happens once or twice a year, at best — as the primary conduit of feedback, well, it’s really too little too late.

Carol Bartz, the former CEO of Yahoo, made this very point when she told the same New York Times Corner Office column back in 2009:

If I had my way I wouldn’t do annual reviews, “[especially] if I felt that everybody would be more honest about positive and negative feedback along the way. I think the annual review process is so antiquated. I almost would rather ask each employee to tell us if they’ve had a meaningful conversation with their manager this quarter. Yes or no. And if they say no, they ought to have one. I don’t even need to know what it is. But if you viewed it as meaningful, then that’s all that counts.”

Say what you will about Bartz and her tenure at Yahoo, but she’s right on the money when she says she would “rather ask each employee to tell us if they’ve had a meaningful conversation with their manager this quarter.” That is what solid, useful feedback is about — having meaningful conversations with your evaluees on a regular schedule, because if you wait to do it in the performance review, you’re really too late.

Traditional reviews not a reliable measure

Jason Lauritsen, a veteran HR pro, management consultant, and sometimes contributor here at TLNT, had this to say when it comes to the subject of performance reviews:

A few weeks ago, I asked a large room of recruiting professionals at a conference to raise their hands if they felt that traditional performance appraisals were a reliable and consistent way of measuring performance. Not one hand went up. Not one. Houston, we have a problem.”

Lauritsen went on to add that rather than focus on performance reviews, what you really need to have is ongoing “performance conversations” with employees that are an ongoing process to give and get feedback as well as provide the means to help the person improve. He says:

Performance management really boils down to a simple question: did you do what was expected of you? Performance management isn’t about forms and ratings. It’s about meeting expectations. So, teach managers how to have conversations with employees to clarify expectations up front and to measure performance against those standards on the back end.

Performance management doesn’t require formal documents or process. It is incredibly simple. We’ve added complexity over the years based on faulty assumptions and misplaced hope that the additional forms and processes add value. They don’t.”

Simply a management tool

Deborah Farrington may be a great venture capitalist, but when it comes to management and leadership, she may not be the best source of wisdom and advice. Perhaps The New York Times’ Corner Office column didn’t do her words justice, but whatever the case, keep in mind that if you believe that “the most important conversation you can have with anybody who works for you is the performance review,” well, maybe you need to rethink just what is and isn’t an important employee conversation.

Yes, performance reviews have their place, but they are simply a management tool and really, not even a very good one. If you want to give solid and meaningful feedback, you really need to break out of the performance review handcuffs and embark on a series of chats and conversations with your people instead.

Remember, if you wait to give this feedback in a performance review, it’s probably too little, too late. With all due respect to Deborah Farrington and her comments to The New York Times, that’s really NOT the most important conversation you want to have because meaningful and instructive employee feedback deserves a lot better.

John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.
  • KellyOlsakovsky

    I really find this quite interesting. My current employer is about to start implementing formal performance reviews, and I find myself apprehensive. I don’t think formal reviews, complete with forms and rating scales, can really make the difference that some hope it will. It certainly doesn’t replace the need for consistent and honest communication throughout the year.

    The other thing that I think is causing a bit of concern is taking into consideration a less than healthy structure, how honest will the reviews be, and how much focus will go into “this is what is not right” rather than “this is what we’ve accomplished” – too easy to focus on the negative when formalizing a process, at least in my opinion.

    • John Hollon

      Kelly: I think you are right to be apprehensive. I’ve found that organizations frequently over-do the formal performance review process and completely fail to give much effort to all the other feedback and discussions that really need to happen to have an effective review process year-round.

      As I said in this post, in my world, the actual annual or semi-annual review is just a formality, a way to wrap up and memorialize the many conversations and feedback you have been giving the employee all the way along the line. If that’s not how it is going in your organization, it is probably going wrong.

      You might want to check out the many posts on performance reviews and appraisals here at TLNT. Simply search on “performance review” in the search TLNT box in the upper right hand corner of the TLNT home page and you’ll get quite a number of posts and insights on the performance review process both pro and con. Reading some of those may help you to better understand (and cope with) what you and your company is getting into.

  • http://twitter.com/LarryHR Larry Wilson

    John I agree with you.  Done well, an annual review MAY be one of several tools that an effective supervisor has at her disposal.  However, very few are done well in my experience.  Too often they are only endured by both parties because they have to do them; and at worst, the boss springs a low rating on the employee during the review without ever having discussed the issue during the review period.  Trust flies out the window along with much of the hope of having an effective conversation.   The most important conversations(s) a manager can have are regular, focused on the issues at hand, and involve listening by both parties.  

  • Kelli L.

    I agree %100, about Ms. Farrigton being a great VC, but perhpas not a pillar of wisdom in the performance management category, as well as annual performance reviews likely being too little too late.  We should really be encouraging people to have meaningful conversations, and for compliance reasons (I suppose, we must), record the date, and the highlights.  That’s it! We’re currently going through annual performance reviews at my job, and it’s going to take 6 weeks just to calibrate the ratings. This seems like WAY too much time doing something, which IMHO doesn’t add much, if any, value. 

  • Howard Risher

    Absoutely agree.  Let me suggest a simple change — Managers need to be rewarded for how well they manage the performance of their people.  And with carefully worded questions, ask their subordinates if they were satisfied.

    And I would also ask the best of the managers to spend perhaps 10% of their time coaching those managers who demonstrate they need help.

  • Steve Hunt

    John, thanks for writing a well-balanced discussion on a topic where people typically express extreme viewpoints.  The key point is that a performance review is a “review” – it is different from a performance coaching and feedback session.   Peformance coaching sessions should definitely influence performance reviews and vice verse but they are not the same thing.

    Performance reviews when done well
    a.  provide the company with an accurate evaluation of a person’s relative contributions to the company in terms of meeting expectations and demonstrating future potential through past behavior, and
    b. provide the employees with clear understanding of the processes the company uses to make decisions affecting their career future (pay, promotions, etc.). 

    The primary goal of performance reviews is to accurately measure and document employee contributions in a way that the data can be used to make decisions on where to invest scarce workforce resources related to pay,development, and staffing.   The problems with performance reviews occur when we treat them as though they were the same thing as performance coaching and development conversations – which they aren’t.

    Steve