Performance Reviews Matter

Performance reviews matter a lot. In this post we’ll aim to explain why they matter, and give options to trim down your process.

Almost one year ago today, we wrote about tech’s downturn. One theme was consistent: we’re in the middle of a reaction, and if you react too far, you’ll be throwing the baby out with the bathwater.

What is tech reacting to?

Broadly, the last 5+ years: Low interest rates, employee-advantaged hiring conditions, DEI programs, polarizing politics, remote work, new iterations of HR-led processes. A large and growing sentiment has been “just cut the fat and build”, with some people suggesting cuts for processes and vocations that long pre-date the ZIRP years, including: User Research, Product Management, Data Science, Chiefs of staff, OKRs, titling, and more.

While that “just build” direction might be correct, swinging the pendulum to the other side too far or for too long will bring problems just as severe as the inefficiencies that caused the reaction.

Of the “cut the HR process” category, one of the more common sentiments is: “Get rid of performance reviews, they are stupid; people should just get feedback in real time, reviews are ceremonial.”

This is wrong.

Performance reviews matter a lot. In this post we’ll aim to explain why they matter, and give options to trim down your process. You may be in wartime, and temporary changes could be necessary, but too little process for too long is a problem, even at war (there’s a reason that the military has very stringent career progression processes).

But First, An Example

A lot of knowledge workers have no concept of what it’s like to not have performance reviews. This is in stark contrast to most of the world, who don’t work knowledge work jobs, and who don’t have performance reviews.

I’ve worked a job before without performance reviews and I know a lot of people who don’t have reviews. What that looks like in reality is a never ending treadmill of hoping to get some more opportunity, not even knowing what’s possible. You sit in the kitchen, or the job site, or the workbench, day in and day out, wondering if a raise or a promotion is 1 month away, 1 year away, or never going to happen. There’s no 1:1s. Most feedback is “don’t screw that up again.”

If you ask about a promotion or more responsibility too often, you might get labeled annoying. What is too often? Depends on your boss. Could be once a quarter. Could be once a year. When a new opportunity does come along, it often feels like magic happened. Why did the boss decide this was the time to let me do something else? Who knows. And when someone else gets promoted over you, don’t even think about asking why.

In those conditions, if you were asked if you like the status quo, or if you would like to chat transparently every 6 months about feedback and your growth path – which would you choose?

You may think these are contrived descriptions, but they’re not. Even in knowledge work, many environments are still a lot like the example above.

So let’s talk about why reviews matter and how to streamline them.

Reason 1: You Reward The Right People The Right Amount

If you’re a company that does regular comp increases, promotions, and/or bonuses – you need some method of evaluating who gets what. Performance reviews are this method. Without them, you’re letting managers just make things up. This is a disaster – see example description for how that looks and feels.

If nothing else, performance reviews at least provide a regular mechanism for evaluation that shows people some sliver of how they’re being judged for rewards.

Reason 2: Feedback Is Important

Everyone should be giving feedback in real time.

You should also not smoke or drink, you should exercise 3 days a week, and you should definitely get 8 hours of sleep every night. In reality, almost no manager gives the perfect amount of real-time feedback, and you don’t follow those health guidelines every day.

Giving feedback is hard, and for many, unpleasant. If you remove the guardrails that force feedback to happen, many people will default to giving essentially no feedback.

Even if your manager did give perfect real-time feedback, you need milestones to reflect over longer periods of time. “That design could have been simpler” is one form of feedback. “You have had a pattern the last 6 months of over-designing systems. Also, it seems you use the decorator pattern as default in many cases, when you should think more about what’s needed from first principles.” is more durable feedback on an intentional change in behavior – the kind that is more easily distilled from a look back in time, not just real-time feedback.

Performance reviews make sure that feedback is given at a minimum viable frequency and that feedback considers a longer timeframe than just recent memory; they raise the floor of management effectiveness, ensuring nobody goes longer than a certain period with some level of focus on these critical areas.

Reason 3: Performance Reviews Are A Way To QA Management

Performance Reviews are a critical way of understanding manager efficacy. Performance Reviews act as the major avenue through which leaders can review and audit the feedback and growth plans that managers reporting to them are generating.

Furthermore, many Performance Reviews include upward and peer feedback about managers. Both of these mechanisms are often invaluable signals to help ensure people are being managed well.

How to Streamline Performance Reviews

OK, maybe you buy that reviews are necessary. I’ll concede that most companies are terribly inefficient at them. Let’s align on the most necessary parts of performance reviews, and tips for streamlining.

First, let’s talk about the timeline. If you’re doing reviews every 6 months, you could get away with moving to 12 months. I’d advocate making reviews faster and running them every 6 months, but the sky won’t fall at 12 months, especially if your back is against the macro wall.

Second, reviews often have elongated timelines to coordinate all the writing. Employees often spend too much time on their self review, hoping to build a durable artifact of their work. You could set one day for the whole org and say: everyone writes their self, upward, peer reviews today.

Third, when it comes down to it, reviews are really trying to get < 10 critical points of information: a few big things you did, a couple places to improve, some feedback from peers, some feedback to managers, and some sense if people are doing poor, ok, or great. This is not that much information. Ways to streamline generation of information:

• You can reduce the bounds of input to make the information faster to get. For example, in order of efficiency:

  • Tell people “only spend X minutes on this”

  • Limit input to X sentences (e.g. “write one sentence each for the 2 places this person can improve)

  • Limit input to numerical scores on various questions (this can work well for upward and peer reviews)

• Manager reviews of employees often take a long time, especially for new managers. Start with a simple bulleted list. Once the main ideas are aligned upon, you can move faster without worry of rework.

• You can use Grammarly to check grammar. You can use ChatGPT to flesh out or rephrase ideas to whittle down and refine – this can be particularly helpful for non-native speakers who can refine language much faster than they can generate it.

• You might have the urge to just have the actual performance review written by managers be brief bullet points. I would generally recommend you don’t do this. One subtext of performance reviews is “my manager is making an effort for me”. Overly brief reviews risk sending the opposite message.

Finally, you might be part of a very small growth company, or a company in bad shape. You can (but don’t have to) put a moratorium on performance reviews for up to ~2 years if one of the following is true:

• Your CEO is the only person who manages managers - you’re small enough at this stage that each CEO report can manage dynamically without process overhead, and the CEO can still see and understand the work being done by everyone.

• Your company is on the ropes. Maybe in the next 18 months you will either live or die based on execution. You can skip performance reviews.

• In either case, if the state lives for longer than 2 years, you need to go back to doing formal reviews.

Conclusions

Performance reviews are necessary. Done right they give feedback and growth pathing over periods not covered in day to day management. They allow for a history of performance and an auditing of management.

If you’re an IC and you think performance reviews are bad at your company – demand they get better, not that they get removed.

As much as people say they don’t matter, reviews matter. Of all possible things that people reference 4+ years after-the-fact, low-quality performance reviews are the most frequently referenced gripes about past companies – people remember the words and phrases and tone and effort far into the future. Ultimately, a thorough, fair performance review is one of the best ways to show that you care about a direct report; a shoddy, phoned-in performance review is one of the easiest ways to fracture employee trust.

One final anecdote. I used to think Performance Reviews weren’t very critical. I had a hard worker on my team who was a very solid, low drama employee. I delivered the review with medium energy, not bad, but just not great. They resigned a week later, saying the review left them uninspired. While they were already on the fence, I was probably 3 sentences and 2 ideas away from retaining a solid performer for at least awhile longer.

Performance Reviews Matter.

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