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Performance Reviews: Useless or Worthwhile?

As the end of the year approaches, managers and supervisors throughout the corporate world will begin having conversations with the employees who report to them. These conversations usually involve tools like a self-evaluation form completed by the employee, feedback forms completed by the supervisor, and possibly peer evaluations completed by co-workers.

There isn’t one part of the employee-employer relationship that isn’t as stacked against the employee as this process.

In a perfect world, these performance reviews could be valuable, with the manager offering specific tips for helping the employee reach his or her professional goals. Rather than this, most of the time these discussions are partisan, with each party selling its side without listening to the other. The employee’s function is clear: to present himself or herself in the best light. Employees have the opportunity to make sure their management is aware of the positive work that has been completed and any achievements made. Managers, on the other hand, use performance reviews to make sure their direct reports understand the areas where development is needed.

In companies where compensation is based on these performance reviews, this situation is more prevalent. In a discussion where performance leads to compensation, the manager represents the company and is always looking for ways to save money, particularly in salary-related expenses. On the other hand, the employee wants to justify a bonus and a raise.

As a result, the discussions are mostly useless because everyone has an ulterior motive.

On a rare occasion, it is possible for some insight to come from annual performance reviews, but anything worthwhile shouldn’t wait until a meeting that occurs once a year. The last thing an employee wants during an annual review is a surprise, as a boss criticizes a behavior that could have been changed or resolved months prior with effective communication and feedback.

Author Samuel A Culbert suggests eliminating this process in his book, Get Rid of the Performance Review and replacing it with more effective conversations.

Is the performance review an effective tool in your organization? Or do you avoid performance reviews by owning your own business and answering to no one other than your customers? If that is the case, your business’s success is largely a review of your performance, anyway. But not every job function produces results that are as tangible as the company’s bottom line. (If my performance was based on the financial success of the large company I work for, they’d crown me CEO.)

Published or updated November 24, 2010.

About the author

Luke Landes is the founder of shizennougyou. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 22 comments… read them below or add one }

avatar 1 Anonymous

I worked for a major aerospace firm that had annual performance reviews which specified the value of the employee’s contribution and determined the annual pay raise. It was always a difficult and trying period which generally sent me home in a funk during the holidays. We did however have some very specific rules, a couple which addressed your stated issues. One rule involved never “introducing” a performance issue during the review. That meant that any and all performance issue must have a paper trail BEFORE the review. Performance issues, if any, had to be addressed during the year or they couldn’t be addressed in the formal review. All evaluations would have to contain direct reference to business successes/failures of the product or services provided. These did not solve all of the problems with performance reviews but it did tend to mitigate the uselessness you subscribe to and provided a more effective summation of issues, successes and failures.

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avatar 2 Anonymous

Oops… may not have made it clear that I was a manager who had to write 19 – 27 reviews each year. Making judgements about real people, rather than processes and procedures is not fun for most managers and results in a holiday funk for some

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avatar 3 Anonymous

I think the performance review is extremely valuable from both the manager and employee perspective. In order for an employee to effectively do their job, management needs to lay out their objectives for them. At least once a year, management needs to provide feedback to the employee and suggest/require coaching suggestions (i.e. take a job-related class, etc.)

The problem is that many employers don’t have frequent conversations with their staffers about this and the performance reviews becomes like a dreaded revelation of test results to them. Ideally, management needs to hold reviews once or twice a year but there should also be informal progress meetings with them throughout the year (i.e. weekly, monthly, bi-monthly, etc). Nothing major, just brief coaching sitdowns. This way employees receive constant feedback throughout the year and there would be no surprises on their review.

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avatar 4 Luke Landes

If there are informal progress meetings throughout the year, and no revelations during a formal performance review, how is the performance review “extremely valuable?” No new information would be presented. The employee already knows where he or she stands. I’m not talking about meetings where you set objectives for the coming year… that is not a performance review. In most cases, performance reviews exist only as a mechanism for supervisors to exercise a reminder that a hierarchical structure exists. That speaks more to a weak supervisor who is only seen as a leader due to a hierarchical position rather than an ability to lead peers. Those types of leaders rely on performance reviews to exercise leadership.

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avatar 5 Anonymous

I think the key here is “formal” and “informal”. Let’s face it, informal meetings may never happen even though many people prefer regular feedback. That can happen for many reasons, such as if you have a situation where one person manages employees in multiple cities. With a management-mandated annual “formal” review, it forces managers and employees to sit down and discuss performance once a year at the very least.

As for objectives, since it’s frequently something that’s continuously updated throughout the year, it’s nice to be able to keep it separate from the performance review, but I’ve seen them frequently used during performance reviews as something to segue to (ie. “that was last year, now here’s what you need to do THIS year”)

Also, Stevedh brings up a good point about performance ISSUES which need to be addressed as they occur. They should definitely never be a surprise on a performance review. On a related note, I will also say that poor performance reviews can be vital to a company’s management and/or HR department for documentation purposes. They can be used against you if a company is looking for grounds to fire you…usually that’s addressed with documenting negative performance issues, but if a person does score lowly on a performance review it may trigger management to implement a performance improvement plan which, if not met, could lead to a person’s suspension or dismissal.

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avatar 6 Luke Landes

“… it forces managers and employees to sit down and discuss performance once a year at the very least.”

It’s rare that two people, when forced to do something, particularly if the supervisor has no or insufficient training in leadership, will be effective in the thing they are forced to do.

The annual review should not be the only documentation of performance issues, though it is helpful for that purpose. The documentation *should* occur throughout the year, if there is a problem that could result in some kind of disciplinary action. Even as you describe it, the performance review is a way for a supervisor to establish control over an employee — a poor form of leadership. Both parties in a performance review need to work together and go beyond their roles of “supervisor recounts the issues to justify a low or no pay increase” and “employee touts their accomplishments to try to beg for a pay increase,” and to go beyond the idea that the supervisor must always “win” (in order to not seem to be a weak leader to his or her own supervisor). When employees and supervisors are forced to fulfill these roles, the smallest issues become problems and the smallest accomplishments become major successes… and due to hierarchical structure, the employee is always in the worse position to negotiate.

In most cases, compensation is already decided upon by the annual review, so as long as there is sufficient communication throughout the year, I again say the annual review process is usually a waste of time an effort. If there isn’t sufficient communication, well, that’s a performance problem in itself.

Multiple cities shouldn’t be an excuse for a lack of communication throughout the year… if people can’t handle communicating while working remotely, they probably shouldn’t be working remotely.

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avatar 7 Anonymous

Now Flexo, I’m sure if you had met all the objectives set forth by your manager last year, you wouldn’t be so bitter about your performance review. LOL…wait…am I getting one from you this year? (GULP)

avatar 8 Luke Landes

Haha. Yeah, you better watch out or I’ll give you a “bad performance review.” (In fact, it would be a poor supervisor who sees disagreement itself as a reason for a mark or comment on/during a review.) Actually, I’ve never had a particularly bad performance review to be bitter about, at least not with a supervisor who had any respect within the company, but I have had ineffective performance reviews, and I recognize a flawed system.

avatar 9 Financial Samurai

Shouldn’t you be talking about next year’s objectives in your annual review? If you plan on working at the firm continuously, isn’t therefore a year end review highly necessary?

avatar 10 Anonymous

One more thing on the importance of documentation…if you’re in a company that re-organizes constantly and seem to report to someone new every two years, old performance reviews can be an invaluable tool for a new manager who’s now handling different staff.

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avatar 11 Luke Landes

I can’t argue with that. Performance review documentation should also be helpful when an employee transfers from one department to another. But it will only be as helpful as the quality of the review itself, and only if the new supervisor reading the review recognizes that it only tells part of the story — a story heavily weighted towards the supervisor’s point of view.

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avatar 12 Anonymous

In my (limited) experience, more often than not performance reviews have been little more than going through the motions. The bureaucracy requires that my manager and I fill out our respective portions of the form and so we do. Then I get a raise based on my chain of command’s perception of my worth, perhaps relative to my peers’, that they already had in mind before the process started.

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avatar 13 Anonymous

I agree with everything about this comment.

The review is just a formal process that doesn’t change a thing in any instance that I have been involved with. The review is simply tailored to reflect what the management chain already intends to do. I generally do well so don’t feel I have been hurt by this but am annoyed at the waste of time and the illusion that they actually provide some value in determining your ranking rather than just reflecting how management had already decided to rank you.

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avatar 14 Anonymous

I believe this is a major problem today with large companies because they feel its necessary to set up these policies that try to create a black/white evaluation process for criteria that always ends up being in the GREY area.

I find these year end reviews to give too much power to policy and the decision maker… i.e. the managers who evaluate us. In the chain of command, that manager is also getting an evaluation from his boss, and so forth and so forth, and that is the problem. What truly gets evaluated when certain pressures come from above? Some companies demand that 10% of the people get below average ratings, but what do you do when you have a group of 10 people that are all amazing? So many flaws in this system, we could write a book about it.

Many managers I speak with have expressed that they wish they would get rid of this process, but it will never go away, its how Corporate America works and we either have to deal with it or blaze or own path. Great work Flexo, a very very timely topic.

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avatar 15 Anonymous

“Some companies demand that 10% of the people get below average ratings, but what do you do when you have a group of 10 people that are all amazing?”

I’ve been in that situation before and, although I understand the “curve” thing, was not pleased one bit with implementing it.

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avatar 16 Anonymous

I dont think its entirely useless.
I think a combination of manager/supervisor and peer review might work for certain positions.

When my old company doesnt performance reviews for new hires the supervisors didn’t go their jobs and people that aren’t qualified slipped through the cracks.

One can only hope they come up with a better way of evaluating employees.

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avatar 17 Donna Freedman

When I worked at a newspaper I did stress out about performance reviews at first, but wound up enjoying them. It was a chance to look back at the year’s body of work and realize that I’d done some pretty good writing. I was also able to document any particularly challenging situations, so the higher-ups would know which sows’ ears became silk purses due to my hard work.
Once or twice the supervisor’s remarks did sting — but that was because they were on target, and I was allowed to respond to them before the final, formal evaluation went into the file.
Having the review reminded me that I was doing a very good job and that I more than earned my keep. Of course, if I’d had a horrendous supervisor it would have been a different story.
Raises weren’t huge, especially toward the end of my tenure there. But it was good to document why, exactly, I had earned it.

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avatar 18 Luke Landes

I agree that the process is more useful when it includes an opportunity for the employee to respond… but in many cases, employees do not fully respond because they are worried about appearing ungrateful or petty in official HR documentation, or a supervisor has used his or her status as the boss to subtly intimidate — even if not intended.

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avatar 19 Anonymous

We have annual reviews at my company. I’d say they are half useful. Its not really adversarial in nature though so that is good. THe managers rarely use it as a way to give good feedback but thats not really the intention. Mostly its a means for employees to state their contributions which is then compared to everyone else and used to justify raises and promotions. I think its half useful since as an employee I don’t get much out of it in way of feedback and I don’t have visibility to what my peers are doing yte I”m compared against them. Our system could be better but its not too bad over all.

In general I think annual performance reviews are useful. (assuming they aren’t done awfully) Without an annual review, employees may lack any real guidance or milestones on their performance and achievement.

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avatar 20 Financial Samurai

Performance reviews are such great times to bring up goals and grievances by both parties. Good to have one mid year and end year so there are fewer surprises.

Just make SPECIFIC goals, and you are either going to achieve them and get rewarded or you won’t. It’s a beautiful, transparent, meritocracy.

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avatar 21 Anonymous

I absolutely despise performance reviews. My current manager’s philosophy is that no-one gets the highest rating so despite working my @$$ off, the best I could hope for is the equivalent of a “B.” Not very motivating. My worst experience, however, came from an insecure, petty, vindictive manager who had previously scored me as “Exceptional” for years prior but after a disagreement marked me down to “Meets Expectations”–the equivalent of going from an “A” to a “C.” There was no way to grade her incredibly poor management skills so as an employee, I was basically screwed.

I agree that managers and staff should be having regular meetings to discuss goals, performance, expectations, issues, etc. rather than undergoing this HR @#$%. (Did I mention I DESPISE performance reviews?)

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avatar 22 tigernicole86

We do a mid-year and a year end review. I find that the mid-year is usually rather useless because I really don’t know what to put as a performance issue( or opportunity as they so kindly put it). The year end is usually good but why not have a quick 5 minute chat once a month?

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