Here’s Why Performance Reviews Don’t Work: Time for a Change in the Workplace

Feb 29, 2024 | Employee Engagement, Performance Management

Performance reviews have played a central role in people management for decades. In the traditional workplace, employees would sit down once per year with their manager for an evaluation of their performance. However, modern workplaces have different needs than organizations of the past. Hence, it’s time to upgrade the review process.

In this article, we’ll discuss how to rethink these practices by designing a process built for modern work environments. By responding to the growing need for change in the workplace, you’ll strengthen employee productivity and organizational success.

Table of Contents

1. The Traditional Performance Review Model

2. Challenges in Current Performance Review Practices

3. The Shift Toward Continuous Feedback

4. Best Practices for Modern Performance Reviews

The Traditional Performance Review Model

A whopping 95% of managers feel their organization’s performance review process needs to improve, Gallup has found. And only 14% of employees feel inspired to improve by these appraisals.

In most cases, the conventional approach to performance reviews fails to deliver the desired results. Because it provides only an annual or semiannual review, employees lack consistent insight into their performance.

“Now more than ever, employees want to know where they stand and how to further their careers, but most organizations do not effectively deliver that information,” writes the Society for Human Resource Management (SHRM). Managers may have in-depth conversations with employees only once or twice a year, depriving them of the ongoing guidance they crave.

Challenges in Current Performance Review Practices

Why is the traditional performance review model so ineffective?

  • Feedback quality and relevance suffer when reviews happen infrequently. Managers are more subject to issues like recency bias—the tendency to overemphasize more recent events. They’re likely to remember the past month far better than what happened nearly a year ago.
  • Performance appraisals often have conflicting purposes, as Kevin R. Murphy and coauthors write in Performance Appraisal and Management. Organizations use them to make advancement decisions as well as to foster personal growth—and employees feel too distracted by the former to focus on the latter. “Organizations that attempt to use the same system for many purposes may find that it does not serve any of them well,” they write.
  • Infrequent performance evaluations also bring a high level of stress. The stakes feel higher than with more regular reviews (especially when decisions on promotions and raises are based on them).
  • The traditional review process requires an enormous amount of preparation time as managers struggle to recall the events of the past 6 or 12 months. More frequent reviews tend to be less time-intensive and cumbersome.
  • As mentioned, employees want consistent future-focused conversations that promote career growth. Providing this support is one of the most essential ways to boost employee engagement—and traditional performance reviews don’t do that.

When done well, however, performance appraisals provide a big-picture view of employees’ progress and needs for development. A skilfully conducted performance review can play a major role in supporting employee growth, as Murphy and coauthors assert.

Clearly, it’s time for a change in the workplace. In the following sections, we’ll discuss what this entails.

The Shift Toward Continuous Feedback

An employee and their boss having a feedback session.
Credit: Edmond Dantès /Pexels

Continuous or even real-time feedback has become a fast-growing trend in performance management. Through this approach, employees can adapt to the demands of dynamic work environments because they gain tips and advice in the moment. As a result, employee productivity rises and teams become more agile and effective. 

Further, continuous feedback enhances the employee experience. Today’s employees expect ongoing development, approaching their daily work as a learning opportunity. They want their skills and knowledge to be enriched each day, and they want to understand exactly where they need to grow—and how. You’ll ramp up employee engagement as you work to meet this need. Leverage continuous feedback tools to make sharing real-time input easy and convenient, whether you’re remote or on-site.

Best Practices for Modern Performance Reviews

Let’s discuss how to implement much-needed change in the workplace by conducting performance reviews designed for today’s world. From setting clear objectives to focusing on development, we’ll explore how to hold reviews that motivate and inspire.

Hold Frequent Conversations

Create a review schedule that holds appraisals more than twice a year. In today’s organizations, goals often shift frequently, and a modern process helps employees recalibrate to meet emerging needs. It helps them understand their performance in recent endeavours while also setting new personal goals.

Today, 28% of organizations are holding quarterly performance reviews. Some conduct reviews after the culmination of a project. Whatever evaluation schedule you choose, make sure managers are holding frequent (e.g., weekly) one-on-ones with direct reports as well.

Link Feedback to Career Goals

A performance conversation shouldn’t just be an info-dump about everything an employee needs to work on. Instead, frame the discussion around personal goals. Employees will feel eager to learn and improve when they see exactly how it will benefit their career. Together, you can create a pathway to those longer-term goals as you set new objectives and benchmarks.

Likewise, when giving frequent feedback, be sure to relate it to employees’ broader goals whenever possible. Remembering these goals in your daily conversations will also show your commitment to their success.

Launch the conversation by focusing on their purpose. “Starting a performance review by asking ‘What inspires you to give your best each day?’ encourages big-picture, forward-focused thinking,” says Gallup. “It helps employees connect their personal contribution, purpose, performance, and engagement to their organization’s mission.”

Discuss Barriers to Success

As you set new goals or discuss current ones, talk with employees about the obstacles they must overcome to achieve them. Discuss the specific types of support you’ll provide to make this possible. For instance, if they need to begin giving presentations, do they need personal coaching in public speaking?

Train Managers

Coaching managers to have sensitive and productive conversations takes effort, SHRM emphasizes. This presents a learning curve for most organizations. But taking the time to upskill managers will pay dividends. So, hold regular trainings that teach and reinforce vital skills for managers. Explore how to coach employees by discussing challenges sensitively and productively.

Walk through key steps of the review in these trainings, too. For instance, in preparing for the review, managers should write up a concise list of bullet points to cover. They should also think of clear examples to demonstrate each key point. During the conversation, they should have a dialogue with employees about challenges, successes, and opportunities for growth. They should make sure to block out time for discussing next steps as well. Discuss how to handle each of these subtasks skilfully, along with how to accurately assign ratings.

Use Cutting-Edge Tools

Adopt software solutions that will streamline your performance review system. The best tools simplify the process of conducting more frequent reviews. They can even help structure informal conversations.

By evolving performance review practices to meet the needs of the modern workforce, you’ll enhance the capabilities of your whole team. Plus, employee productivity and motivation will increase as you deliver truly motivating reviews. So, take time to reassess and update your performance review processes. By enhancing them with contemporary performance management tools and strategies, you can greatly improve employee engagement and achieve more ambitious results.

See for yourself how software can help you reshape your performance review process—demo our product!

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