Summary: Performance reviews have a bad reputation, but they don’t have to. When done right, they become powerful tools for career growth, leadership development, and company culture. Research shows that only 1 in 5 employees feel their company’s performance practices motivate them. But with the right design, reviews can fuel engagement, skill development, and organizational success.

Why have performance reviews at all?

The performance review process is not often taken positively by employees — and that makes sense. The process is notorious for being biased and fraught with hurt egos. According to a study by Gallup, just one in five employees agreed that their company’s performance practices motivated them.

Performance reviews, developmental chats, and feedback sessions can be so much more than steely, awkward conversations. If done well, they can be golden opportunities for employees to grow in their careers beyond their jobs, managers to develop as leaders, and CEOs to identify top performers.

The truth is, we all yearn for feedback and development. This desire isn’t just about personal growth – it’s rooted in our brain’s craving for progress and certainty at work. For more on this, explore our CAMPS Model on employee “brain cravings.”

Here’s where we stand: performance reviews are still essential. The very thing that discourages companies from implementing performance reviews – the tough job of ensuring constructive feedback – is still necessary for employees and leaders to grow and develop.

How performance reviews shape culture

Performance reviews or no performance reviews, we recommend focusing on clear feedback systems and development conversations. Our Manager CORE Program is a starter for such efforts.

The result? A potent culture of feedback, where all team members actively provide and eagerly seek effective feedback. 

A feedback culture establishes two crucial benefits:

1. Conversational capacity: When feedback is normalized, people fear it less and are more receptive. For example, if you only receive feedback twice a year, it holds a lot of weight and can feel scary. However, if you receive it every week, it feels less daunting, making you more open and confident to continue the conversation toward action. We call this building conversational capacity.

2. Development: If employees know how to give and receive feedback, every conversation can become a development conversation. Ideally, a performance review is a review of feedback already received, not news you hear for the first time. The last thing you want is for people to store up feedback to share during a performance review because, at that point, it’s less relevant, receivable, and helpful.

How do companies use performance reviews?

There are several reasons companies use performance reviews. We see four mentioned frequently by our clients:

• Developmental: To provide a predictable format for discussing growth and career direction.
• Corrective: To consolidate performance feedback in one place and prevent surprises.
• Predictive: To gather insights about themes and development needs.
• Analytical: To determine compensation and promotion decisions.

What should performance reviews include?

Effective performance reviews balance self-assessment and external evaluations. To reduce bias and increase usefulness, include these elements:

• Questions that solicit specific, actionable information: Prompt reviewers to reference examples (observable behaviors) and impact.
• Links to goals and competencies: Anchor evaluations in stated expectations for the role.
• Lag and lead measures: Measure both outcomes (lag) and behaviors (lead) to provide a full picture of performance. 

What is an example of a performance review? [Free Template]

We created a Performance Review Template incorporating elements we have seen work well, with an eye toward simplicity and reducing bias. It’s an example of what your performance review could look like.

Powering up performance reviews

As workplaces evolve, it’s time to rethink traditional reviews. Investing in clear, consistent, and constructive feedback methods unlocks employee potential, increases job satisfaction, and strengthens culture.

LifeLabs Learning is committed to equipping organizations with the tools to transform performance reviews into instruments of constructive change. When done right, reviews can guide individuals and organizations toward their best futures.

Performance Review Playbook

For more performance-related tools and templates, download our free Performance Review Playbook now.

Frequently Asked Questions