The performance review theatre

Once a year, organisations around the world perform a ritual that both sides know doesn’t work.

Research shows that just 14% of employees strongly agree their performance review inspires them to improve, and only 2% of Fortune 500 CHROs strongly agree their own performance management system does either. 

Fewer than a quarter of employees think the process is even fair. If a medicine only worked for 14% of patients, we’d stop prescribing it. Yet, we keep running performance reviews anyway, because the ritual has become a theatre that organisations feel compelled to perform.

Twelve months of behaviour – good, bad, indifferent – gets compressed into a single rating, discussed once, then filed away until the same conversation next year. 

Yet the rating often says more about recency bias than the full twelve months in review. Nobody remembers March by December, including the manager completing the (often overly complicated) form.

What actually works requires more courage and is harder to fit into a calendar invite. Feedback (positive and negative) close to the moment it’s earned, given often enough that the annual conversation becomes a summary rather than a surprise. 

Employees who are regularly involved in setting their own goals and who are provided with regular feedback on how they’re tracking, are four times more likely to be engaged than those who aren’t.

None of this needs a new system or a longer form. It needs managers who can talk to their people about performance more than once a year, and organisations willing to admit the annual review was never really about development. It was about a process that made underperformance defensible in a tribunal.