Performance reviews are an important element in the broader set of processes that make up performance management. Their main purpose is to inform administrative decisions (such as on pay, bonuses, promotions or redundancy) and/or to support professional growth and improvement. They can also inform target setting.

How are performance reviews changing?

There’s been much debate over the last decade about whether ‘traditional’ approaches to appraisal are fit for purpose. Some have argued that performance management should be abandoned wholesale, but typically employers overhaul it rather than scrapping it entirely.

Criticisms of traditional approaches to performance reviews are:

• They aren’t frequent enough.
• They focus on past performance with little attention paid to future performance improvement, learning and development.
• Feedback often comes from a single source (the line manager) which can give too narrow a view.
• Assessments are too subjective, not a reliable reflection of actual performance and unfair. 
• The process as a whole is excessively bureaucratic, time consuming and demotivating.

What is the evidence on performance reviews?

Our evidence review Could do better? What works in performance management summarises the research. For example, there’s good evidence that it helps to give frequent and immediate feedback, and focus on strengths and development.

There are two main uses of performance reviews:

• to inform administrative decisions – on issues such as pay, promotion, and redundancies.
• to support learning and development purposes. 

Practitioners often assume that appraisal meetings should do both these things. However, research shows that they involve different cognitive processes and lead to different manager decisions, so it is best to focus on them separately. 

The purpose of a meeting or stage in the appraisal cycle should always be made clear.

Performance is often assessed through standardised metrics but can also draw on qualitative comments. Our evidence review People Performance explores how employers should understand and measure people performance at the individual and team level. 

The focus of performance measurements

Some jobs lend themselves much more readily to performance metrics than others. In some contexts, accurate and even real-time performance data are available on teams or individual employees: an example is a customer contact centre, where data on call length and outcomes can be recorded as the calls take place. In other contexts, what constitutes good performance may be defined more broadly and there may be longer timeframes – for example, in many project-based jobs. 

Not all measures focus on outcomes. They can also relate to employees’ behaviours and attitudes against an organisation’s values, or to their learning and development.

Methods of assessing performance

In some jobs, performance metrics can be calculated on an ongoing basis through management information systems. If reliable and relevant data can be collected, this can be a valuable source for performance reviews.

Some employers go further, making this data available through real-time dashboards. An additional benefit of a live dashboard is that people or teams can adjust their effort or the focus of their work in response to changing demands, which is especially useful in time critical environments.

A more subjective but sometimes more appropriate approach is for managers or their employees to given written feedback in their own words. This can be done through a questionnaire on aspects such as an employees’ contribution to the team, role development and effectiveness. See our evidence review People Performance for guidance. 

The right measures for the job

Collating data can be time consuming and distract from delivering work and making improvements. Performance measurements should thus be selected carefully to be relevant and useful. Employers should reflect on what types of performance they want to emphasise and managers should scope out what these constitute. There are three broad types:

• Task performance: the core activities included in one’s job. 
• Contextual performance: activities that go beyond one's job remit which benefit the organisation as a whole.
• Adaptive performance: the ability to respond to unexpected changes (for example, handle crisis situations) or innovate.

Bias in performance ratings

Performance measures need to be trustworthy as well as relevant if they are to be relied upon. Unfortunately, there’s a lot of potential for bias in performance ratings. For example:

• A manager may be biased if they personally like or hired an employee. 
• Raters tend to give higher ratings if they are considerate, and lower ratings if they are conscientious or if they feel powerful in their organisation. 
• Employees can sometimes enhance their ratings through self-promotion or ingratiation, or damage their ratings by challenging the status quo.

A practice that is increasingly being stopped is ‘forced ranking’ or ‘guided distribution’ ratings – in which a fixed proportion of employees must be rated as high or low performers. Research suggests that it is likely to harm performance because employees tend to see them as unfair. 

Ratings accuracy can be increased in various ways, including:

• Training raters (for example, in techniques for comparing employees with set standards).
• Using composite scores instead of a single score (for subjective measures).
• Averaging scores from different raters.
• Using an expert to check scores.

Regular feedback can support motivation and inform learning and development. It is vital that employees can contribute or respond to the feedback they receive, so it can make more sense to talk about ‘performance conversations’. These may go beyond employees’ recent performance to also cover challenges they have faced, practical support or development they need, and how their role and career may be developed.

Feedback skills

Once managers have their employees’ performance assessments, they should lead a two-way discussion with them of the results. Giving feedback requires well-developed people skills. These include:

• Asking good questions – when to use open or closed questions, and how to probe in a way that encourages people to expand on their experiences, views or feelings.
  
  
• Active listening – to take in what is being said, notice body language, help people clarify and respond in a way that helps the conversation.
  
  
• Giving constructive feedback – focusing on evidence and actual examples, not subjective opinion, reinforcing positives and strengths, and knowing when to be directive and when to take a coaching approach.

The strengths-based approach

A human tendency when considering how to improve is to focus on weaknesses or problem areas and try to fix them. However, as shown by our research Strengths-based performance conversations, it can be better to help employees build their strengths and replicate successes in other areas of their work. Strengths-based approaches tend to take a coaching style and be more future-focused, which may be part of the reason for their effectiveness. They don’t mean ignoring underperformance, but rather focusing on what’s already working well.

A practical description of how managers can have strengths-based performance conversations is described by Kluger and Nir:

• Step 1 – ‘Eliciting a success story’: Ask the employee to focus on what’s been working well for them, identify a specific instance and expand on it in detail.
  
  
• Step 2 – ‘Discovering your personal success code’: Get them to explain how they contributed towards this success (and what support they needed).
  
  
• Step 3 – ‘The feedforward question’: Ask them to reflect on their current priorities and consider how they can replicate this ‘success code’.

Check in: how useful was your appraisal? 

There’s strong evidence that it’s employees’ reactions to feedback, rather than the feedback itself, that influences future performance. So it’s crucial that employees see performance reviews as fair and useful. It is thus worthwhile checking in with employees afterwards to see if this is the case – either in a one-to-one conversation or a survey. 

360 degree or multisource feedback involves employees receiving ratings and feedback from a number of stakeholders, including colleagues and any reports they manage, as well as their own manager. This can give employees a fuller picture of their performance and a more objective basis for administrative decisions.

However, there is a risk that the process can be ‘gamed’. For example, reviewers may have an interest in showing colleagues in a good light, or alternatively have an axe to grind.
Some things that help are:

• Briefing employees and reviewers clearly on the aims and objectives, what the feedback will be used for and how it should be given.
• Explaining the process, including how reviewers are selected, how feedback is collated and how it will be presented.
• Maintaining confidentiality, not attributing feedback to an individual without their permission.
• Offering employees support such as coaching to help them act on the feedback.

Books and reports

ARMSTRONG, M. (2017) Armstrong's handbook of performance management: an evidence-based guide to delivering high performance. 6th ed. London: Kogan Page.

ASHDOWN, L. (2018) Performance management: a practical introduction. 2nd ed. HR Fundamentals. London: CIPD and Kogan Page.

Visit the CIPD and Kogan Page Bookshop to see all our priced publications currently in print.

Journal articles

CAPPELLI, P. and TAVIS, A. (2016) The performance management revolution. Harvard Business Review. Vol 94, No 10, October. pp58-67. Reviewed in In a Nutshell, issue 62.

DENISI, A.S. and PRITCHARD, R.D. (2006) Performance appraisal, performance management and improving individual performance: a motivational framework. Management and Organization Review. Vol 2, No 2. pp253-77.

HARARI, M.B. and RUDOLPH, C.W. (2017) The effect of rater accountability on performance ratings: a meta-analytic review. Human Resource Management Review. Vol 27, No 1, March. pp121-133.

IQBAL, M.Z., AKBAR, S. and BUDHWAR, P. (2015) Effectiveness of performance appraisal: an integrated framework. International Journal of Management Reviews. Vol 17, No 4, October. pp510-533.

KLUGER, A.N. and DENISI, A. (1996) The effects of feedback interventions on performance: a historical review, a meta-analysis, and a preliminary feedback intervention theory. Psychological Bulletin. Vol 119, No 2. pp254-284.

CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.

Members and People Management subscribers can see articles on the People Management website.