The Truth Behind Employee Performance Reviews
Performance reviews have been a workplace tradition for decades, but let’s be honest—most employees dread them, and many managers struggle to make them meaningful. If you are using performance reviews, they're probably not working the way you think they are supposed. Are they truly effective, or are they just another checkbox? The truth is, performance reviews can either be a powerful tool for growth or a complete waste of time, depending on how they’re handled. Here's what's actually happening behind those forced conversations.
Why Traditional Performance Reviews Fall Short
They’re Too Infrequent – Annual reviews often feel outdated by the time they happen. Employees need real-time feedback, not a once-a-year recap. Important issues get swept under the rug. Managers use the performance review as the only way to provide feedback and 32% of employees said that they have had to wait over three months for their managers to give them feedback.
They Focus on the Past, Not the Future – Many reviews emphasize what went wrong instead of how an employee can grow and improve, causing employees and managers to dread the conversation.
They Feel Like a ‘Gotcha’ Moment – When employees only hear constructive feedback once a year, it can feel like a punishment rather than an opportunity to improve. A performance review should never be the first time an employee hears about feedback. This happens way too often because 50% of employees did not expect their performance review rating.
They Lack Clear Goals – Vague comments like “Needs improvement” or “Doing well” don’t provide actionable steps for development. Employees unsure of their goals, do not know what success looks like.
They Have Recency Bias - Recent events overshadow long-term performance.
They Become Outdated - Goals become outdated halfway through the year
One-way communications – If no feedback is solicited from employees during the process, there is a missed opportunity in the performance review process.
Inconsistent or nonexistent evaluations – Whether your performance reviews are done on a regular cadence or not done at all, the result is the same – possible disengaged employees.
The Real Purpose of Performance Reviews
A well-executed performance review should:
Foster open communication between employees and managers.
Empower employees to take ownership of their career development.
Provide clear direction on career growth and expectations.
Align with your small business goals and needs.
Recognize achievements and boost employee morale.
Identify challenges and provide support to overcome them.
Support employee professional growth.
How to Make Performance Reviews More Effective
Forget the traditional performance review playbook. Below are successful actions small businesses can take. Take a moment to read our previous blog, “9 Easy Steps Toward a Successful Performance Evaluation Process” to learn more.
1.Make It a Continuous Conversation
Instead of a once-a-year discussion, implement monthly or quarterly check-ins and real-time feedback. Depending on the type of work your business conducts, you may need to implement weekly 30-minute touchpoints also. Research reveals that companies that share consistent feedback report 14.9% lower turnover rates. This dedicated time with an employee provides an opportunity to discuss accomplishments or issues real-time, rather than a year later. Employees should always know where they stand and by making the feedback continuous, you improve your employee retention.
2. Balance Positive and Constructive Feedback
A great review highlights strengths just as much as it identifies areas for improvement. Employees should walk away feeling motivated, not defeated. The “Sandwich Technique” is a great method to use when giving feedback used to “sandwich” the feedback in between positivity. Start with something positive, “You are a critical part of the team.” Then provide the specific feedback, “Your recent absences from our team meetings have caused discord and confusion within the team that we can’t have moving forward.” Then, close with something positive with an offer of assistance, “I’m here to help you be a successful part of the team. What do you need from me?” This method makes it easier to GIVE feedback and for the person to RECEIVE feedback.
WARNING - Never be dishonest when giving feedback or it can come back to bite you in a lawsuit. Using the example above, if they are not a critical part of the team, don’t say that. Instead, maybe say, “I would like to see you be successful here and I know you would like to be successful here also.”
3. Set Clear, Actionable Goals
Help employees create S.M.A.R.T. (Specific, Measurable, Achievable, Relevant, Time-bound) goals so they know exactly how to improve and grow. Sixty-five percent of employees want more clearly defined goals, tasks and responsibilities. Vague and subjective feedback is usually a result of not setting clear expectations. Employees who are involved in goal setting are 3.6 times more likely to be motivated. This increased motivation is because they have buy-in to the goals which means the employee is more likely to achieve the goal. Be sure to get regular updates from the employee and be flexible to adjust the goals as needed.
4. Encourage Two-Way Dialogue
Performance reviews and one-on-ones should be a conversation, not a lecture. After providing feedback, give employees space to share their own feedback and career aspirations. Let them talk about their progress, accomplishments, and areas for improvement.
Future-focus conversations as much as possible. Instead of spending the bulk of the time on the mistake(s) they made, or the negative thing they did, focus the discussion on how to resolve it or what will be done in the future. Allow them to lead the discussion about the resolution. Then always ask what the employee needs from you to help resolve.
5. Tie Performance to Career Development
Employees are more engaged when they see a path forward. As a small business, career development and growth opportunities are usually plentiful. Use performance reviews to discuss growth trajectories, skill-building, and professional growth opportunities. Ask the employee about their career aspirations. Based on what they share, provide specifics around what they can do to build their career that are in line with your business. For example, if you have a real estate business and your employee wants to pursue a criminal justice career, be honest with your employee that those skills don’t fit in your organization. Be honest with the employee about how you see their skills fitting into the organization now and long-term. If you do not know, be honest and say that.
6. Train Your Managers
In 69% of organizations, managers have received insufficient training in performance management. This means that most managers are unaware of how to use their active listening skills to foster a healthy two-way dialogue during performance reviews. They also are unaware of how to give constructive feedback techniques to ensure the employee feels motivated and empowered after performance review discussions. Managers should also be knowledgeable in overall appropriate documentation for performance reviews for legal compliance. Contact CPR to help you train your managers!
The Bottom Line
Performance reviews shouldn’t be about checking a box—they should be about building a strong, engaged, and motivated team. If your business is still relying on outdated review methods, it’s time to rethink your approach. The best performance review system is one that actually gets used and creates positive change.
Need help designing a performance review process that actually works? We can help - Contact us today!
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
