Why traditional performance reviews don’t work and what you can do about it

Lack of perspective

Why should judgment be based on a single manager’s opinion? An employee might engage with any number of different projects, teams, and other individuals across the organization. And it’s not just that it doesn’t make sense, it’s downright dangerous in terms bias, too—as much as 62% of a rater’s judgment of an employee has been shown to reflect the rater, rather the person being reviewed.

Lack of relevance

Reviews are often based on archaic output measures, applied uniformly, and leave up to a yearlong gap in between. This not only fails to legislate for the modern knowledge-based workplace and the nuance of different roles with in it, but it also means employees are left waiting too long for feedback, missing the chance to learn valuable lessons in the moment.

Lack of expertise

Most managers haven't been trained on how to evaluate performance, give feedback or create development plans, so how can they be expected to do it effectively? Little wonder they aren’t happy with the review process either—only a miserable 13% believe the process is useful.

Lack of proper feedback

The quality of feedback managers provide is extremely important—it directly impacts productivity, after all. Yet performance reviews tend to require an instructive approach that simply tells employees to do ‘more of that’ or ‘less of this’, failing to genuinely improve their skill set, mindset, and performance.

Lack of time considerations

The review process takes time. This can make it feel like a stressor rather than a development opportunity—especially when managers have multiple reviews to deliver in quick succession. And it’s costing organizations, too—something like $2.4 million to $35 million a year in lost working hours for an organization of 10,000 employees.

The psychological fallout

All this adds up to bad news for those involved, with negative consequences for individuals, teams, and organizations alike.

Crushing of motivation

A review system that emphasizes process over people leaves employees feeling like cogs in an uncaring machine, diminishing their sense of belonging and purpose and robbing them of a key intrinsic motivator. And rather than use positive achievements to motivate, an annual cadence combined with a recency and negativity bias means that praiseworthy achievements are often glossed over or even ignored altogether. Add to this a lack of clear direction and opportunity for truly meaningful personal development, and it’s hardly surprising that employees can feel demotivated by the whole process.

Erosion of trust

A cornerstone of trusting environments is psychological safety, where individuals feel able to speak up without fear of being judged. It’s hard to imagine a process more ill-suited to this than performance reviews where the explicit purpose is for a manager to pass judgment. All this really achieves is to suppress productive dialogue. And it’s doubly problematic when things like pay rises and promotions are on the line, as that encourages gaming of the system. Meanwhile, with a single manger spearheading it all it can feel highly subjective and unfair for reviewees, too. This creates a lack of trust in the process that can easily bleed into feelings towards the organization as a whole.

A different path

The good news is that it doesn’t have to be like this. There are other methods and approaches out there that managers can harness to help build a healthier feedback culture and get teams performing at their best.

Continuous feedback

It’s all-too-easy for annual performance reviews to become the sole forum for manager feedback, leaving employees in the dark in the interim. As things are left unsaid, trust diminishes, and valuable learning opportunities are missed. Adopting a continuous feedback process instead opens a constant dialogue between managers and their teams allowing for real-time growth and development. When regular feedback is open and honest, trust builds, creating a psychologically safe environment where teams can perform at their best.

To create a continuous feedback culture, consider taking the following measures:

Seize the moment. Provide feedback as soon as possible to capitalize on learning, ideally within 24hrs.

Schedule regular feedback. Build in time for meaningful feedback sessions between managers and individual team members once a week.

Offer multiple feedback channels. Allow for multiple feedback possibilities including one-to-ones, feedback surveys, town halls, and tech platforms.

Goal-oriented discussions

Feedback from managers is more powerful when it’s directed towards achieving specific objectives or outcomes. This way, people are clear on what they’re doing, why they’re doing it, and where they’re heading—ensuring they’re motivated along the journey. But it’s important that these goals are also relevant and meaningful to the individuals concerned. Going a step further, folding these individual goals into organizational and team goals helps foster a sense of purpose and understanding of their place in the bigger organizational picture.

To embed inspiring goal-oriented discussions in your organizations, try the following:

Make goals meaningful. Ensure goals are personally relevant by drawing on individual aspirations.

Plan ahead. Identify what needs to happen to reach these goals, recognizing the likely blockers and plans to overcome them.

Align goals. Match individual goals with team and organizational goals so everything is pulling in the same direction.

Strengths-based approach

Historically, performance reviews have failed to account for individualized strengths and placed emphasis on what’s lacking rather than what people are doing well. But research tells us that focusing on the positive is a far more effective way of improving performance. Helping employees see their strengths and tap into them fully means they feel more capable and are better placed to use them to achieve bigger and better things.

To help place more focus on people’s strengths, give these ideas a go:

Take time to understand employee strengths. Build knowledge of employee strengths using observation, self-reporting, and psychometric modelling if needed.

Switch the focus in reviews. Include more opportunities to deep dive into what’s gone well and explore how strengths have helped that.

Remember the golden ratio. For every piece of negative feedback, provide five pieces of positive.

A brighter future

The tide is turning on traditional performance reviews and some of the world’s biggest companies have already ditched them altogether—Deloitte, Apple, and Netflix to name but a few. While that may feel like a step too far some, the reasons behind this teach valuable lessons to organizations willing to listen. Performance reviews in their current guise are barriers, not facilitators, to development. And it’s managers who find themselves trapped in the middle. On the one hand, they want to honor organizational processes. On the other, their team need meaningful development. But by harnessing the approaches above, and with the organization support to make it happen, managers can still lead their teams to peak performance, even the under pressure.

Have you thought about using coaching to help your managers perform under pressure? See how EZRA Edge harnesses this superpower to get managers, and their teams, performing at their best…