Annual Performance Reviews Underperform: A BusinessWeek Debate

Earlier this month, BusinessWeek’s The Debate Room hosted an interesting discussion on performance reviews. The value of performance reviews is a hotly debated subject, and we’ve been following for some time. From what I have read in the blogging world, it seems that the majority of people agree that getting employees’ feedback is fundamental to success, but performance reviews fail at providing helpful actionable feedback. Here’s the topic:

The types of formal yearly performance reviews employers impose on their workers are counterproductive and morale-sapping. Pro or con?

Pro: Just an annoyance

They become an excuse for not evaluating performance the rest of the year. As in “Yes, I know Johnson in accounting is lagging a little and seems dissatisfied, but his performance review is coming up in four months—we’ll handle it then.” If you don’t give your employees regular, specific, timely, and relevant feedback (good and bad), you should not be a manager at all.

Con: Done right, they work

Now, in tough economic times, employees need honest feedback and a sense that they add value and are part of the future success of the company. Now is not the time to skip these critical discussions. Every senior executive who witnesses the power of an effective performance management process agrees with the CEO who once told me “I’d never manage any other way. I wouldn’t know how to drive business results without it.”

Check out the rest of the post on BusinessWeek’s The Debate Room. What do you think? Are performance reviews “moral sapping and counterproductive”, or are they necessary and helpful?