Why performance reviews are best left to mothers-in-law

Useful feedback to any employee is in the form of continual informal feedback over the whole year, writes Sabah Al Binali.

Here is a secret – managers do not dislike employee performance reviews because the reviews are difficult, but because the managers are usually decent people.

Formal performance reviews are presented as a positive feedback mechanism that helps employees develop. The reality is that performance reviews usually happen once a year, and that is far too infrequent to be of any use. Even the most aggressive review programme maxes out at four times a year, still too infrequent to be of any use.

In a normally functioning company, useful feedback to any employee is in the form of continual informal feedback over the whole year. A formal review adds no real value to employee development over and above an informal feedback process.

Formal reviews seem to have two major roles, neither of which creates value for the company or the employee.

The first role of a formal performance review is to create a documented body of evidence that could be used by the supervising manager to justify various decisions related to the employee such as compensation, promotion or termination.

It is irrelevant whether these justifications are valid or not, for if they are valid a paper trail should already exist. If there is a valid continual feedback process there will be a paper or electronic trail regarding performance.

And if the justifications are not valid, there is no reason to have a formal performance review, as then the sole purpose for its existence would be to allow managers to attack employees with impunity, or provide undeserved bonuses to favourites.

To be clear, I am not suggesting that employees should not have their performance reviewed. The point is that between adults, reviews are informal. A formal review is demeaning, as one adult is effectively parenting another.

To understand the humiliation of a formal employee review, imagine other facets of your life being subjected to an auditing process.

What if, as an adult, your parents would sit you down at the end of every year and point out all your failures over the past 12 months? In reality this happens informally during the year.

That is what mothers-in-law are for.

How about your friends? Could you imagine if they individually sat you down at the end of the year and pointed out your shortfalls as a friend? Worse, could you imagine that your best friend met with your other friends then sat you down and gave you group feedback?

Formal performance reviews are patronising in the same way.

If the employee’s manager has been doing their job over the year, then there should be nothing to say at the end of the year. But in reality, there are companies in which people, usually the ones who went to business school, think human resource management needs formal performance reviews at its core.

How can companies manage the employee feedback process better? First, feedback done once a year means that the manager left the employee stewing in their bad habits for a whole year before informing them of this fact. Performance feedback absolutely has to be weekly, and even more frequent if necessary.

The second thing to be aware of is that human beings do not respond to grading and ranking. What is more effective, being told that you were graded 2.3 out of a maximum of 5 for business development once a year, or getting 30 minutes of feedback after each client meeting? It would be a good use of the travel time back to the office.

In the end, a one-hour meeting filled with arbitrary numerical scores, even as much as four times a year, pales in comparison to constant feedback.

Human resource departments would be well served to stop wasting their time on developing numerical scoring sheets or training their managers on how to give feedback each period.

Instead, they should train their managers to provide feedback on a real-time basis, reinforcing positive actions and providing effective alternatives to suboptimal actions as they happen.

For the manager who cannot escape a formal employee review, this does not preclude the advice to have the continual informal review. In such a case the formal review should hold no surprises and should be a foregone conclusion.

If your employee is ever surprised by your formal review then it is you, the manager, who has failed.

Sabah Al Binali is an active investor and entrepreneurial leader with a track record of financing, building and growing companies in the Mena region. You can read more of his thoughts at al-binali.com