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The Potential Evolution of the Performance Review Process


As organizations continue to evaluate their performance management process, the age-old practice of conducting the manager-employee feedback session on an annual basis could eventually fall by the wayside.

A Korn Ferry survey found that while the vast majority (87%) of the 2,151 professionals it surveyed said they have an annual performance review with their boss, 96% said real-time feedback and ongoing performance discussions with their bosses are more effective. A common reason why, survey participants said, is the goals they set in their reviews are no longer applicable a year later when they sit down to measure performance.

“Imagine if you had a Fitbit that only gave you feedback once or twice a year, it wouldn’t be that useful,” said Tom McMullen, senior client partner at Korn Ferry. “For people to course correct or get reinforcement that they are on a good direction or that they need to change directions, having more timely and immediate feedback is more valuable than just getting feedback once or twice a year.”

The practice of ongoing feedback from managers is made easier by improved technology. And if the trend of more frequent review process continues, organizations will lean on various applications or platforms to automate the process. McMullen said he expects employers to utilize apps that arrange feedback meetings while also tracking how an employee is progressing with performance and development.

“I think tools and processes that strike the balance between impactful and being simple and streamlined will be where the action is,” McMullen said.

Some warn that fully automating the performance review process, however, is dangerous. In a recent webinar on performance management, McKinsey & Co. partner Byan Hancock said, “you can create the best system in the world with the best amount of employee involvement, but if at key junctures, the managers aren’t taking responsibility, it’s a problem.”

Research from MIT Sloan suggest that ongoing investment and innovation in AI capabilities will result conflicting answers when it comes to whether it should be humans or machines conducting performance reviews.

McMullen explained that organizations are tinkering with this idea in the interim, which is why many are shifting their approach to performance reviews.

“I think in general organizations are trying to swing the pendulum more from an HR exercise to more of a leadership tool,” McMullen said. “With the thought being, if it’s really a way for leaders to move the organization, that performance management is one of the key things that they have at their disposal to do it.”

While there’s clearly a transition to continuous feedback underway, the annual practice of performance reviews still holds some favor. The Korn Ferry research found that 68% of employees look forward to their annual reviews. And those annual reviews are commonly tied to rewards, such as base salary increases, promotions and bonuses and incentives.

It presents an interesting range of possibilities for organizations that might ultimately decide to do away with those yearly reviews.  

“I think how people perform will still impact things like base-salary increases and promotions,” McMullen said. “But I think we’ll see organizations take a critical look at this feedback and decide the right weight that it should factor in and in what ways it should impact various financial and non-financial rewards.”

Read More about performance reviews in this WorldatWork Journal article.


Putting Performance Reviews on Notice

The standard performance-review process is outdated, writes Lisa Bodell in this Forbes piece. Bodell, the founder and CEO of FutureThink, asserts that forward-thinking companies are moving to a performance review model that is a continuous feedback loop. Thus, she provides five alternatives to the standard year-end review process.

Who Gets the Last Word?

Customized and continuous data-driven feedback is becoming a new normal for organizations. Michael Schrage examines whether AI-favored feedback requires a human touch to measurably improve its impact in this MIT Sloan article. Schrage explains how organizations are at a crossroads when it comes to performance management and who gets the last word: humans or machines? 

Reducing Bias

Deborah Holstein addresses the issue of bias in performance reviews and how to fix the problem in this HR Technologist article. Holstein highlights recency bias, halo effect and gender bias as three prominent forms of bias. She provides four ways managers can avoid or reduce bias in their performance reviews.

Low Marks for Performance Reviews

Formal attempts to rate employees don’t seem to meaningfully improve employee performance or give companies any sort of competitive advantage, writes Chris Woolston in this Knowable Magazine feature. Woolston gathers insight from HR and management experts who are dubious of the performance review process and the potential negative affect it can have on a company’s culture.

Removing Gender Bias

Research consistently shows that people give men higher performance ratings than women, even when their qualifications and behaviors are identical, writes Lauren Rivera and Andras Tilcsik in this Harvard Business Review article. The article details how these biases negatively effect women’s career prospects and contribute to gender pay gaps and details a way to fix this. 

About the Author

Brett Christie is a staff writer at WorldatWork.

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