Destructive Criticism Think performance reviews are useful? They're not.
By Ellyn Spragins

(FORTUNE Small Business) – Here are ten words you'll probably never hear an employee say--or utter yourself: "Boy, I really learned a lot from that performance review!"

Ludicrous, isn't it, to think that anything could actually be gained from that annual torture session called a performance appraisal. How this exercise ever became a fixture of business life is not our worry. We won't dwell on how the words "performance appraisal" can make an employee feel like a stud horse in need of Viagra. No, our mission is to wipe the earth clean of the fussy review forms, the "needs improvement" boxes, and the sickening feeling of dishonesty as you grope for words that might magically turn a slacker into a grade-A worker while protecting you from a wrongful-termination suit. But first you'll need to renounce these three myths you tell yourself about employee reviews.

Myth 1: They're required for legal reasons. With few exceptions, they're not. In the past decade worries about lawsuits from disgruntled employees have made the appraisals comically ineffective. Managers dutifully haul workers in to give them vital feedback but then use human resources gobbledygook to avoid saying anything substantive. "This stilted process is often a lose-lose situation because managers are too ill equipped or too nervous to be honest about people's faults," says Mark Oldman, founder of Vault, a career-information website. In fact, evidence from appraisals helps employees in lawsuits at least as much as it does employers, say Tom Coens and Mary Jenkins in their book Abolishing Performance Appraisals (Berrett-Koehler Publishers, $27.95).

Myth 2: They improve employees' performance. It's probably true that feedback can help employees. It may even be true that you're capable of giving objective, useful coaching. But conducting reviews only once or twice a year is like trying to get ripped by working out just once a month; nothing's going to happen. If you're honest with yourself, you'll admit how rarely a conventional performance review actually generates change in employees. What's more, annual appraisals sabotage efforts to empower employees through job autonomy and self- management responsibilities. Nothing says "I'm the only one around here whose opinion matters" like an employee review where you sit in judgment.

Myth 3: They help reward the best people. Business owners insist on thinking of employees as trained circus animals who perform perfectly if offered the right reward. Proof: Managers frequently feel they have to talk about raises when reviewing an employee's performance, says Alfie Kohn, a lecturer and the author of Punished by Rewards (Houghton Mifflin, $14). News flash: Even in these lean times, money isn't a big motivator. Study after psychological study shows that "money ranks well behind such factors as interesting work or good people to work with," says Kohn. The lesson? There's no reason to talk about raises or bonuses during a review.

It shouldn't be hard to wean yourself from these universally hated sessions. Replacing them with something that works, on the other hand, will be. Why? Because at a perfect company, coaching and collaboration take place every day. In an ideal world you have a relationship that allows an employee to say, "You know, I really suck at the sales part of this job. Can't someone else do it?" Instead of bribing employees to do what you want, the trick is figuring out how your company can benefit when they get to do the work they like--and can do--best. That's the kind of appraisal that everyone could learn a lot from.