The Problems with Performance Reviews and How to Fix Them

Ah, annual performance reviews – perhaps the most dreaded meeting by both employee and boss.

Even worse: Researchers say they aren’t only dreaded and ineffective, they’re potentially harmful to the people and the company if the feedback isn’t meaningful.

Performance Reviews Fail to Inspire

Just a small percentage of employees feel that their performance review inspires them to improve. The rest of the people? They might just be surviving the dreaded meeting!

For many organizations, the performance review is often seen as the right thing to do, or worse, the thing “we’ve always done.” Some organizations rely on the performance review to determine pay and establish accountability.

But in today’s world of hybrid, remote and results-based work, that’s not the norm anymore.

Here’s where researchers and HR experts have found that performance reviews go wrong. We’ve included their strategies for ways to help employees thrive.

Problem 1: They’re Annual

Let’s address the first problem head-on. “The issue with annual performance reviews is that they are annual!” says Lana Peters, Chief Revenue & Experience Officer at Klaar, an HR platform built by HR leaders. “That gap in performance-based discussions means mistakes or opportunities for growth are either not addressed or underdiscussed, and that successes and growth aren’t being recognized and appropriately celebrated.”

Now, let’s put this in another perspective. What if you discussed what everyone likes to eat with the person or people who are involved in cooking at your home once a year? How would weeknight dinners pan out? Or breakfast on the go work?

“If someone doesn’t know how their actions are being perceived, there is no indication of how they can be the best version of themselves at work,” says Peters.

Better approach: Obviously, meet more often in a structured format. We have more details on less structured feedback in the next tip.

Problem 2: The Timing Is Still Bad

Even the managers who do better than the annual review with bi-annual or quarterly chats don’t have a great cadence.

They’re still going for as many as three months without giving feedback. And employees don’t get to talk about their needs and concerns.

No praise, correction, insight or foresight.

By the time they talk, it can feel more like the boss is rehashing a bad time or praising too late.

Then employees become defensive or resentful. In fact, Gallup found because of that, reviews actually lead to worse performance one-third of the time.

Better approach: Meet more often. You don’t need formal reviews every month. But managers should have conversations about performance, workload and progress monthly. “Build one-on-one feedback into the natural flow of work,” says Peters. “This can be made simple with the use of HR tech –  where employees and managers share quick, structured updates on a weekly or biweekly cadence. This helps keep performance top of mind without extra administrative work, calibrates expectations fairly, and helps managers spot risks like disengagement or an unmanageable workload.” 

Problem 3: They’re Awkward

Even if organizations get the cadence right, reviews can still be awkward for managers and employees – even when they’re supposed to be informal.

Another reason: “Employees dread reviews because they often aren’t tied to growth,” says Peters. “It can feel like nitpicking on past mistakes without a clear path forward and, to stressed employees, this feels like a waste of time.”

And really, most managers don’t want to be nitpickers either. What’s more, “reviews often come with a lot of paperwork,” says Peters. That’s stressful, too.

Better approach: Try a regular conversation around these topics. You can include all three or one or two each time you sit down with coffee (or walk while talking):

• Review: Talk about recent goals, outcomes and lessons learned from them.
• Development: Consider growth areas and set short-term, actionable goals.
• Praise: Recognize specific achievements and strengths.

Problem 4: They’re Complex

Managers often cram too much into reviews because the meetings are few and far between.

They review performance, give advice on improving, praise, set salaries and bonuses, decide promotions and consider needs for performance improvement plans (PIPs).

Some companies create generic paper forms for managers to fill out, leaving little room for personalized experiences. Then employees get narrow feedback that adds little value to their performance.

If you mix all the elements into one annual, standardized conversation, it can become complicated.

Better approach: Talk about separate issues in separate conversations. That’s especially important for performance and compensation conversations. If there’s talk of performance improvement in ongoing conversations, schedule a separate PIP meeting. Same goes for the other end of the spectrum: ongoing conversations about excellence need a separate promotion discussion. You might try tools to keep track of day-to-day performance basics, too.

“An effective performance management system does more than evaluate performance. It aligns individuals with organizational goals and objectives, fostering growth and building a positive working culture,” says Peters.

Problem 5: The Fixes Are Too Broad

Managers almost always talk about performance and areas for improvement. After all, no one does everything perfectly all the time. So companies have processes and protocols to improve performance.

Problem is, not all positions call for the same kind of plan. What works for front-line manufacturing workers might not work for office employees.

Better approach: Simplify the PIP process with flexibility. Require managers and employees to have more frequent conversations about work expectations, progress and development. That alone can help improve engagement and performance. “When done well, performance management builds organizational clarity by giving answers to what success looks like, how success is measured, and what someone’s role is in the bigger picture,” says Peters. “It can be seen as a translator between the business.”