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.

Performance Reviews Fail to Inspire

Just 14% of employees feel that their performance review inspires them to improve. The other 86%? They might just be surviving the dreaded meeting!

For many organizations, the performance review is often ingrained as the right thing to do, or worse, the thing “we’ve always done.”

Often, the organizational structure relies 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: Timeliness

Managers spread out reviews – yearly, bi-annually or quarterly.

So for as many as four to 12 months, managers do give employees feedback. And employees aren’t speaking 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.

Problem 2: Complexity

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.

Problem 3: Broadness

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.

Problem 4: Training

Many managers and supervisors don’t get training on how to evaluate performance, give feedback or develop employees. But they needed it. So they just wing it every time.

Better approach: Train new managers to have ongoing reviews. You might also offer training on soft skill such as Emotional Intelligence to help managers have better conversations.