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Informal assessments can supplement regularly scheduled performance evaluations or even take their place completely, depending on the organization. Informal assessments have the advantages of flexibility and timeliness, but they don't provide any documentation that can be referred to later, if needed. Informal assessments are more useful in some situations than others.
Formal, Informal or Unpredictable
Some business owners don't provide any structured feedback at all; instead they just get angry when something goes wrong. Unpredictable barrages of criticism are no substitute for a performance review process, whether formal or informal. Many companies prefer to use regularly scheduled performance evaluations, but these can leave employees feeling that they don't have any direction or support between formal reviews. This can be especially problematic when an employee starts an important new project and needs to know whether he's going about it the right way. Informal performance assessments can fill in the gap between formal evaluations.
Feedback When It Matters
An informal performance assessment should always include praise for both good work and instructions, or suggestions for improvement where applicable. For instance, a sales manager could praise an employee for closing a sale while pointing out that he neglected to offer the customer some available options. The advantage of the informal performance assessment is that the employee receives feedback immediately, rather than having to wait for an official evaluation, allowing him to focus on whatever he needs to do to improve without delay.
No Paper Trail
The disadvantage of the informal assessment is that there is no documentation of the interaction. This usually doesn't matter, but it can end up being very important in the event of a lawsuit. For example, if a supervisor has a dozen conversations with an employee about being respectful to customers, and then lets him go when he fails to improve, there is no record to show that the conversations ever happened. If the employee alleges breach of contract or illegal discrimination, the company can have a hard time proving that it ever attempted to correct the employee's behavior. Many companies write up all disciplinary infractions to avoid this type of problem, but a performance evaluation is broader and includes feedback on what the employee does well and how to improve.
When Feedback Helps Most
Informal assessment is most useful when it gives the employee information she can use to do a better job. A Texas A&M University study on informal performance evaluations found that some types of feedback were considered much more important than others in practical terms. Employees usually found feedback from their immediate supervisors useful, but were less interested in feedback from people higher up in the organization or in other areas of the company. Employees were most successful when they received feedback both before and after attempting a task. They preferred to receive clear instructions about what was expected of them, followed up by a clear assessment of whether they had fulfilled expectations and what they could do to improve.