It’s Time to Ditch Your Performance Reviews

The Problem with Annual Performance Reviews

If you’ve ever sat through an annual performance review and wondered, “What was the point of that?”— you’re not alone. Employees and managers alike find the process frustrating, time-consuming, and largely unhelpful. The truth is, traditional reviews don’t drive development or performance. Let’s break down the key reasons why this legacy practice continues to fail.

1. Employees focus on the rating, not the feedback - Annual reviews reduce performance conversations to a single score. Instead of absorbing constructive feedback, employees fixate on the rating –missing the opportunity for growth.

2. A substitute for timely feedback - Managers frequently postpone important conversations, relying on the annual review as their primary feedback tool. This delay allows issues to linger and deprives employees of the real-time input they need to improve.

3. Little impact on performance - Traditional performance reviews rarely inspire employees to improve. The process is often so demoralizing that it undermines motivation and can even worsen performance.

4. A costly ritual with minimal return - Organizations invest millions of hours and dollars into performance reviews each year, yet the return on that investment is negligible. The process consumes resources without delivering measurable value.

5. Poor documentation when it matters most - Ironically, performance reviews often fail to document actual performance issues. When termination becomes necessary, reviews typically lack the clarity or evidence needed to support the decision.

An Alternative Approach

If traditional performance reviews are ineffective and widely disliked, why do so many organizations still cling to them? The answer lies in two persistent challenges.

1. Managers struggle with real-time feedback - Replacing annual reviews requires a shift to continuous, meaningful feedback—and that responsibility falls on managers. Unfortunately, many lack the skills or time to deliver it consistently. The ability to communicate effectively and offer constructive feedback—especially across generational lines—is one of the most underdeveloped competencies among managers today.

2. Uncoupling reviews from rewards is complex - Performance reviews are often tightly linked to compensation decisions, including merit increases, bonuses, and promotions. HR teams hesitate to abandon the process because it provides a structured (albeit flawed) mechanism for determining rewards. While employees deserve fair and transparent compensation, organizations struggle to separate pay decisions from performance evaluations.

Better Recognition, Rewards, and Results

These challenges can be successfully mitigated with the right strategy, tools, and training. With targeted development and clear accountability, managers can build the skills needed to deliver meaningful, real-time feedback. And by aligning compensation and advancement with demonstrated capabilities, organizations can successfully decouple performance reviews from rewards.

Working without performance reviews is not radical—it’s practical. But it requires leaders capable of holding individuals accountable and motivating teams effectively, and an HR team willing to rethink how pay and recognition are structured. If your organization is struggling with outdated performance management practices and mindsets, please reach out to me for help.

Read how Amy Hirsh Robinson replaced traditional reviews with a capabilities-based compensation model: King’s Hawaiian Killed Old School Performance Reviews. Should you too?

Register for a free, half-day, virtual HR summit on September 24th with Amy Hirsh Robinson and other thought leaders: Performance Management Reimagined

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