# Perverted Performance Reviews By:: [[Brian Heath]] 2023-02-07 Formal performance reviews exist because most managers are bad at their job. Think about it: the point of a performance review is to discuss what an employee is doing well, where they could improve, and to provide some reward such as a promotion or raise. Instead of this being a once-a-year activity, shouldn't this be what the manager is always doing? What else is the manager doing if not providing feedback on what is going well, what needs to be improved, and motivating the employees? Yes, there are other things such as prioritization and attending meetings to discern the organization's priorities. But these decisions are minor tasks for most managers versus managing their team. If you are an employee and aren't getting regular feedback on your "performance" from your manager, you have a bad manager. Organizations innately know that most of their managers are bad. Many studies show that the number one reason people leave their job is that they have a bad manager. To combat this and reduce turnover costs, organizations have implemented a mandatory performance review process. Why not just hire and/or train managers to be better? It turns out that hiring and training is hard and expensive. It is much easier to put together a process and appropriate propaganda to check a few boxes. When this didn't do the trick, organizations started layering in bonus structure conditions that refuse to payout any incentives or provide promotions until after the yearly performance review. The effect is that employees are forced to stay in their roles without knowing their performance and hoping to get a bonus that may never come in a year. Sure, many bail after the performance review cycle is complete, but at least we got the most out of them during that 12 months. But did they really get the most out of them? Wouldn't it have been more effective to provide them feedback all of the time so they could improve for 12 months? The calculus is clear, but so too is how we find ourselves in performance review process hell. Short-term thinking and incentives create local rational responses that result in long-term sub-optimal solutions. Performance reviews are bad even by the popular monetary and unit economic paradigm that most organizations operate within. However, few challenge it as it risks disrupting the [[status quo]]. Change is hard, but being on the wrong side of the revolution is even harder. #### Related Items [[Organizational Analytics]] [[Management]] [[Performance]] [[Economics]] [[Hiring]]