Performance Reviews

Performance Reviews: Why and How

March 22, 2023
Performance Reviews: Why and How
Written by

Danny Huang

What is a performance review and what is its purpose?

A performance review is a formal process used by companies to evaluate an employee's work with their goals, competencies, and values, and based upon that provide feedback on areas of strength and areas that need improvement. The review typically includes a discussion between the employee and their manager, where the manager provides feedback on the employee's performance over a given period of time, such as a year or six months.

It is clear that people become higher performers in their respective fields by identifying specific areas where they need to improve and then practicing those skills with feedback, and that’s where performance reviews come in, serving specific purposes such as: 

  • Compensation 
  • Talent retention/development
  • Legal liabilities 

There certainly are pros and cons associated with written reviews, and it is up to each company to decide what’s best for them according to their structure and culture. However, effective performance reviews can be pivotal toward developing a trusting and productive team culture. 

Real-time and Continuous Feedback

Almost all the HR tech companies have added features to facilitate and encourage real-time and more frequent feedback over the last 6+ years because it helps address recency bias by providing a record of an employee's performance over the entire review period, rather than just focusing on recent events or accomplishments. 

Recency Bias

Recency bias occurs when a manager or evaluator focuses too heavily on an employee's most recent performance or behavior, rather than considering their performance over a longer period of time. This can lead to an inaccurate or incomplete assessment of the employee's overall performance. By providing a written record of an employee's performance over the entire review period, including both positive and negative feedback, managers can avoid the influence of recency bias and provide a more accurate and comprehensive evaluation. Written reviews can also help to provide objective evidence of an employee's accomplishments and areas for improvement, which can be helpful in making compensation and promotion decisions. 

In addition to written reviews, other strategies to address recency bias may include: 

  • Regular check-ins and feedback throughout the review period to ensure that managers have a more complete and accurate picture of an employee's performance. 
  • Training and education for managers on the importance of avoiding biases and providing fair and objective evaluations. 
  • Using multiple sources of feedback, such as feedback from peers, coworkers, and customers, to provide a more comprehensive assessment of an employee's performance. 

By using these strategies and providing written reviews that cover the entire review period, managers can help ensure that performance evaluations are fair, accurate, and objective, and that recency bias is minimized.

Effective performance reviews practices 

  • Shared responsibility in a collaborative and open feedback process 
  • Recognition for contributions and coaching for improvements 
  • Alignment of individual tasks to team and departmental goals 
  • Clarification of expectations and resources 
  • Commitment to continuous improvement and follow-through

Note: As great as they are, however, there are problems associated with performance reviews. Here’s what Frank Cespedes from HBR has to say about it: 

Dissatisfaction with performance appraisals is pervasive. They are seen as time-consuming, demotivating, inaccurate, biased, and unfair. A McKinsey survey indicates most CEOs don’t find the appraisal process in their companies helps to identify top performers, while over half of employees think their managers don’t get the performance review right. A Gallup study is more negative: Just one in five employees agreed that their company’s performance practices motivated them.
These attitudes create a self-reinforcing dynamic. Managers do cursory reviews that are really up or down compensation announcements, not feedback. Employees then see the “appraisal” as non-existent or unfair and approach the next review with that attitude. Busy managers facing quarterly goals then try to avoid the unpleasantness and do even more cursory, drive-by reviews, and a downward spiral continues that promotes a culture of underperformance.

Problems Associated with Performance Reviews

In other words, the problems associated with performance reviews can be summed up into 5 categories: 


Performance reviews can be influenced by the subjective opinions of the reviewer, leading to bias against certain individuals or groups. For example, research has shown that women and people of color are more likely to receive lower ratings than their white male colleagues, even when their performance is similar.

Lack of objectivity:

Performance reviews can also lack objectivity, as they can often be defined by only the loudest individual. This can lead to inconsistencies in ratings across different teams or departments, and can make it difficult to compare performance across the organization.


Performance reviews can also be inaccurate, as they rely on the memory and perceptions of the reviewer. This can lead to incorrect ratings and feedback, which can be demotivating for employees.

Focus on individual performance:

Many performance reviews focus solely on individual performance, which can create a competitive culture and discourage collaboration and teamwork. This can lead to a lack of trust and support among colleagues, and can make it difficult to achieve common goals.

Lack of transparency:

Performance reviews can be seen as secretive, as the feedback given to employees is often kept confidential. This can create a culture of mistrust and suspicion, as employees may feel that they are being judged unfairly or that their colleagues are receiving preferential treatment.

Best Practices for Performance Reviews

Problems with performance reviews highlight the need for a more objective and collaborative approach to performance management, one that focuses on continuous feedback and development rather than a one-time annual or bi-annual event.

Writing better performance reviews involves careful preparation, clear communication, and a focus on providing constructive feedback. Here are some tips to help write more effective performance reviews:

Prepare in advance:

Before writing the performance review, take the time to review the employee's performance over the entire review period. Gather data and examples of the employee's accomplishments and areas that need improvement. 

Use clear and specific language:

Use clear, specific language to describe the employee's performance. Avoid vague or general statements and focus on specific examples that illustrate the employee's strengths and areas that need improvement. 

Be objective:

Use objective criteria to evaluate the employee's performance. Avoid personal biases or opinions and stick to measurable facts and outcomes. 

Provide constructive feedback:

Provide specific feedback on areas where the employee excelled, as well as areas where they need to improve. Focus on providing constructive feedback that will help the employee to grow and develop in their role. 

Use the right tone:

Use a positive and supportive tone when writing the performance review. Even when addressing areas for improvement, focus on providing feedback in a way that is supportive and encouraging. 

Set clear goals:

Use the performance review as an opportunity to set clear goals and expectations for the upcoming review period. Work with the employee to set realistic goals that are aligned with the company's overall mission and vision. 

Follow up:

After writing the performance review, schedule a follow-up meeting with the employee to review the feedback and discuss any questions or concerns they may have. Use this as an opportunity to continue to support the employee's growth and development.

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