Chapter 1

What performance reviews are & how we got here

In order to rethink performance reviews, we must begin with understanding what performance reviews actually are, and what they were originally intended for.

Defining performance reviews

You’ve heard the term a thousand times. But what are we actually referring to when we talk about “performance reviews”?

Performance reviews, most traditionally, are a tool used by organizations to formally assess individual performance, share strengths and weaknesses, and offer suggestions for improvement.

This can happen in a variety of ways, but most commonly, they occur once or twice a year: A manager will write a performance review, based on collecting survey data from their team, and then summarize those points and share it with the individual in both writing and in a 1:1 meeting.

Sometimes performance reviews are called “performance evaluations,” “performance appraisals,” or “annual reviews”…

But regardless of what we choose to call it, the concept of performance reviews has emerged from the same history.

How did we get here?

History reveals much.

Beginning in World War I, performance reviews were first developed as a rating system to help the U.S. military identify and dismiss poor performers. Focused on succession planning, the reviews were not shared with the members of the military being evaluated. The intention of performance reviews was to help the organization decide who to promote or dismiss — not to help the individuals themselves grow.

In short, performance reviews originated as an organizational tool for succession planning, rather than a performance tool to help people improve their performance. Fast forward to the present, and our thinking has changed. In our survey with 1,087 managers and employees, we discovered 70% believe the primary purpose of reviews in an organization is to help a team member develop. We live in a fast-moving global context, where the success of a team is predicated on how quickly a team can improve its own performance by way of ongoing feedback. Thus, modern organizations require some sort of performance tool — a way to give feedback to an employee so they know how to improve. Quite simply: We want performance reviews to help our teams perform better.

However, we don’t succeed at this, using performance reviews for other purposes beyond performance feedback: Bonuses, promotions, and compensation raises are often part of the traditional performance review process. In our survey of 1,087 people, 63% said that their performance reviews were tied to compensation. Additionally, some organizations use performance reviews as a means of legal protection and to justify future firings.

These convoluted intentions lead to convoluted outcomes. Organizations struggle with what to optimize for: If the performance review is supposed to be about giving constructive feedback, how do you then also use it to justify future firings? If you’re using a performance review to promote growth and development, how then does it factor into someone’s compensation that year? Understandably, managers and employees find themselves frustrated, fearful, and demoralized by the process. In our survey, one respondent disparagingly referred to performance reviews as “HR theater.”

Many problems emerge, as a result. We’re left with a performance review process that hurts more than helps.

In the next chapter, we’ll dive into what those exact problems of performance reviews are.

Chapter 2: A broken process →

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