The Evolution of Performance Reviews

Performance reviews have undergone significant evolution in American companies over the past few decades. Initially, performance evaluations were focused primarily on individual job performance, with little emphasis on employee development or goal setting. Even within that evaluative focus, the reviews tended to be a more subjective view of how a supervisor “felt” about an employee in a few categories. Some managers even began looking at the review process as a “necessary evil” instead of an opportunity to develop the potential of an employee. As companies have shifted towards more collaborative and team-based work structures, performance evaluations have also shifted to focus on team and organizational performance, as well as employee development and goal-setting.

One of the most significant changes in the performance review process has been the shift toward continuous feedback. Rather than conducting evaluations only once or twice per year, many companies now provide employees with regular feedback on their performance, allowing for more timely and actionable information. This shift towards continuous feedback is driven by the recognition that performance is not a static concept, but rather is dynamic and can change over time. This shift addressed two major flaws in performance reviews. The first flaw was the “just get it done” flaw that led to many managers choosing either all good marks for people without actual measurement of their performance or all middle-of-the-road marks. The middle-of-the-road evaluators looked at their people with the idea that “nobody’s perfect.” The second major flaw was the idea that the review didn’t actually do any good. One set of employees I worked with years ago described the review process with their boss as a time for the boss to gripe for three hours about anything and everything, then give them a raise. The “venting session” model of performance reviews only takes away from employee performance.

Another trend that has emerged in recent years is the shift towards more objective and data-driven evaluations. Rather than relying solely on subjective assessments, many companies now use a variety of performance metrics and data to evaluate employee performance. This allows for more objective and accurate evaluations and also helps to reduce the potential for bias in the process. The key to making this work is ensuring there are a realistic/manageable number of objectives to manage. If you have 14 Key Performance Indicators (KPIs), then you might as well have none. Between three and five is manageable, but 14 is ridiculous. The data model has become incredibly effective. When done right, it puts the power to earn a raise in the hands of the employees. When done wrong, it takes away all hope of moving forward. Having the right training, the right processes, and the right managers in place while using data-driven performance evaluation will launch a company’s performance so far forward they will wonder why they ever did it the old way.

This evolution of performance reviews in American companies has been driven by a recognition of the importance of employee development and goal-setting, as well as the need for more objective and data-driven evaluations. As companies continue to evolve, it is likely that the performance review process will continue to change and adapt to meet the needs of both employees and organizations. After all, the requirement for feedback from younger generations has become significantly more intense than previous generations required. If we don’t consider our employees as the most important aspect of our company, we won’t adapt to their needs. If we don’t adapt, we won’t survive.

The performance review process has evolved from the traditional annual or semi-annual evaluation to a continuous feedback process where employee performance is evaluated on regular basis, typically monthly. This new approach has proven to be effective as it allows for real-time feedback, more objective and data-driven evaluations, employee development, and goal-setting. This evolution is essential for companies to stay competitive and retain top talent. Take a look at what you are doing to build the performance of your teams. If it isn’t working, let’s talk. Your people deserve a chance to win at the highest levels.