Why Your Performance Reviews Are Setting Your Team Up for Failure (And What to Do Instead)

After 25 years of consulting, I’ve found that performance reviews, a cornerstone of team management, are often deeply flawed. These mistakes are not only frustrating but also damaging, leading to stagnation for both employees and businesses. If you’re committed to building a high-performing team, it’s time to rethink how you handle these conversations.

The Truth Problem: Are You Being Honest?

One of the most surprising yet pervasive issues is that employees aren’t being told the truth during performance reviews. I’ve seen countless cases where employers rate employees as a 4 or 5 out of 5 across the board, despite being deeply frustrated with their performance.

Why? Because the truth is uncomfortable. Managers fear upsetting their team members, so they sugarcoat the feedback. It’s a short-term Band-Aid to avoid discomfort, but the long-term effects are disastrous.

When employees consistently hear they’re “amazing” without constructive criticism, they stagnate. They assume there’s no room for improvement, leading to boredom and a false sense of accomplishment. Over time, this creates frustration for both you and the employee. Honesty may be uncomfortable in the moment, but it fosters growth and clarity, which ultimately benefits everyone.

Frequency Matters: Don’t Wait for the Annual Review

Another common flaw is how infrequent performance reviews are. Many companies stick to an annual review cycle, but that’s the bare minimum. Think about it: even a drawn-out, one-hour review represents just 0.05% of an employee’s 2,000+ working hours in a year. Is that really enough time to invest in their growth?

To build a culture of continuous improvement, consider quarterly check-ins in addition to your annual reviews. These don’t have to be lengthy or formal. A simple 15-minute conversation about progress, challenges, and goals can work wonders.

The Radical Shift: From “Review” to “Preview”

Here’s where I might make you uncomfortable: Stop focusing so much on the past. Performance reviews should be renamed performance previews. Most reviews dwell on what’s already happened, leaving little time to discuss what’s next.

To drive real change, at least 50% of these meetings should focus on future expectations and growth opportunities. What skills does the employee need to develop? What goals should they aim for? What specific actions can they take to level up?

This forward-looking approach motivates employees and gives them a clear path to improvement, benefiting both them and your organization.

Decouple Raises from Reviews

Here’s the elephant in the room: raises. Too often, managers avoid performance reviews because they don’t want to deal with the awkwardness of salary discussions. But raises shouldn’t be tied to the review process.

Performance previews should focus solely on feedback and growth. Raises should be based on measurable improvements over time. By separating the two, you’ll eliminate much of the anxiety that prevents these conversations from happening in the first place.

The Bottom Line

If your performance reviews feel like a chore—or worse, if they’re causing more harm than good—it’s time to rethink your approach. Be honest, make them more frequent, shift the focus to future growth, and separate them from raises. By doing so, you’ll transform your team into a powerhouse of continuous improvement.

Your employees deserve it. And so does your business.