Performance Reviews: A Dreaded or Welcome Return?

Employee appraisals are up by 28% year-over-year. A look at whether companies can make them more effective.  

For many—dare we say most—managers, a performance review is another box to be checked, complete with its own baggage of paperwork and the knowing eyes of bosses, HR, and employees. For their part, many workers have found performance reviews confusing.

But despite such concerns, formal appraisals are back—in a big way. Twenty-eight percent more employee reviews were done in January 2024 than in January 2023, according to new data from HR platform BambooHR, and the average number of performance reviews done per year is increasing by 15% annually

Ten years ago, a report by the Corporate Executive Board showed that nearly 90% of HR managers did not believe that their employee appraisals provided accurate and reliable information. “Not too long ago, we were talking about performance reviews as something of the past,” says Dennis Deans, vice president of global human resources at Korn Ferry. In the wake of widespread hybrid-work arrangements, however, many leaders feel that reviews are becoming necessary.

To be sure, performance reviews can provide a valuable exchange between worker and manager, with some insights potentially boosting careers. Still, many experts say the concept of performance reviews has long been fraught: We all know an employee who manages up well and shines in reviews, while their colleague shoulders much of the work and receives lower performance ratings. For decades, critics have said that managers are often biased or working with incomplete information, while neuroscientists note that ranking employees numerically is counter to human brain function.

And then there’s the overly wide purpose. “The enduring challenge is the large number of competing goals that the meeting means to achieve,” says business psychologist James Bywater, senior client partner at Korn Ferry. Sure, most would agree that a performance review should include support and motivation, but the results, because they are shared with others in the company carry implications for career path, as well as for rewards, promotions, and disciplines. 

But with so many employees now working from home for at least part of the week, reviews have reappeared. “They’re a counterbalance to employees no longer having opportunities for informal feedback,” says human resources expert Ron Porter, senior client partner at Korn Ferry. Even with this recent uptick, the number of US performance reviews lags that of other countries by two-thirds, and a 2023 study in the International Journal of Productivity and Performance Management indicates why: Recent redesigns of performance management systems—at companies like General Electric, Microsoft, Gap, and Adobe—have focused on annual goal-setting and annual (not more frequent) performance appraisals.

To improve them, Bywater says that it is crucial that performance reviews serve the purpose they’re sold under. For example, if employees are told that their performance reviews are developmental, then they should be strictly developmental. “Don’t start making it related to bonus,” says Bywater. If the purpose does change—to compensation and promotion opportunities, say—simply communicating the new rationale repeatedly will help employee comprehension and understanding. “What employees want is clarity and communication,” he says.

One effective approach is to position performance reviews as a capstone of manager meetings and connections throughout the year. “It’s not throwing everything on a piece of paper once a year,” says Deans. He notes that good leaders stand out in their ability to set very clear goals early on, and coach based on them, with pivots as needed. It’s an ongoing process of clear assessment and guidance, of which performance reviews are only one point. 

One frequent strategy to improve performance reviews is to incorporate 360-degree feedback from colleagues around the employee. “But their participation should be voluntary,” says Porter, in order to avoid creating an environment of forced reporting. He also suggests that colleagues be asked questions that are carefully designed to filter out individual bias, and that they be offered an opportunity for open comments to elicit “feedback that is a little more thoughtful,” says Porter.

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