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

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:

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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.