At some level, most leaders recognize that engaged employees are more productive, deliver better customer service and offer a leadership pipeline that allows your business to scale. The employee performance review is one tool managers have to drive employee engagement and results. Unfortunately, the employee performance review does not have a good reputation among most employees or employers. 

Has anything really changed?

As of 2026, we have entered a new era when it comes to talent supply and demand. Some jobs will have a surplus of available qualified talent and some jobs are now or will be in critical need of additional talent (isn’t that the way it has always been?). For either situation, AI is driving change in the entire talent management lifecycle strategy.

From one perspective, employees are potentially sitting in the driver's seat. Immediate information is available about other companies’ job openings that enable employees to consider a job change with relative ease. Employees are offering feedback and reviews about the companies they are working for on sites like Glassdoor (I suggest checking this website to see what reviews employees have left for your company). Even Google and Amazon are not immune to receiving open criticism from their employees. In the past, employee retention was a significant concern. The economy was heating up and unemployment is dropping. Today, freelance opportunities are on the rise, giving employees more options even though corporate jobs are disappearing. Employers are and always have been concerned with competition for talent. Job fit is becoming more recognized as a strategic imperative. Talent assessments are being leveraged more and more as a confirmation audit (risk mitigation) when hiring.

Add the "millennial" (also known as Gen Y) and “Gen Z” dynamic into the mix making employees seem more demanding than ever. The simple fact is that regardless of generation, employees are looking for 1) employers who cast a vision for a greater purpose and practice “good leadership practices”, and 2) provide developmental feedback that enables career growth, and greater income potential.

The Purpose of Employee Performance Reviews

Managing employee performance is and has been a first-level responsibility of managers. With that comes the recognition that employee engagement is the keystone to driving organizational performance to achieve business goals. When done correctly, reviews have the potential to enhance performance and employee loyalty. If done poorly (or not at all) employee performance reviews become something which drive employees to look for another place to work.

Do we have a branding problem?

Just the name alone creates a significant problem that needs to be addressed. It is the big elephant in the room and everyone knows it. The label “Performance Review” immediately creates significant anxiety across the organization, from people managers to employees. And everyone acknowledges it is like looking in the rear view mirror to drive the car. The traditional performance review has a much greater chance of creating harm. In fact, it is perhaps the #1 reason employees leave or quiet quit. So why do we still do it?

It's my hope to provide you with an employee performance review framework, starting with a complete overhaul of the name and branding message that eliminates risk, converts painful conversations into positive outcomes and allows you to make your “review process” a competitive advantage for your business.

A gentle warning.... Conducting “employee performance reviews” suggest that you are actively managing your employees. A performance review is not something you can throw together at the end of a year. If you do, you are asking for trouble. I assume you want to develop your employees and recognize employee performance reviews are a critical part of growing a successful company, retaining high-performing employees and achieving off-the-charts employee engagement – at all levels.

What if we dropped the name “performance review”? Instead, what if we re-branded it as “development and engagement review”?

What Is the business purpose?

An employee performance review is a process by which the job performance of an employee is evaluated against a mutually agreed upon set of key accountabilities and expectations. The purpose of an employee performance review is to provide feedback to an employee so they can take steps to elevate their performance in a way that benefits both the employee and the company.

From this point forward we’ll refer to it as the “development and engagement review” or DER. The purpose of a DER is to ensure that regularly occurring one-on-one alignment meetings occur so that an employee has clarity of purpose, is adequately growing or feeling challenged in areas of interest, is effectively contributing to organizational goals and is experiencing high job satisfaction.

DERs should not be one-sided interactions (boss telling employee what they are doing well and not so well). The DER process can be an extremely valuable feedback loop that improves the way the company's management operates and employees perform.

Who’s to blame for poor performance?

Let’s put the full blame for performance where it belongs – at management’s feet. We can agree to share the blame equally for high performance and low performance. You can’t get the credit for high-performance of your employees and dismiss poor performance as “their issue”. Here’s my argument:

Communicate performance feedback fairly - evaluate job performance in a JIT cadence

To fairly evaluate job performance, the evaluation criteria must be unambiguous.

Every role in your company needs to have clear responsibilities and associated success criteria (key accountabilities or KPIs). If you don't do this, performance feedback will feel random, ambiguous and unfair to the employee and you won't accomplish what you've set out to accomplish – assist the employee in making a course correction, improve results and achieve goals.

Performance reviews must be frequent enough

There has been a shift away from annual performance reviews to what is called continuous performance management. Companies like Accenture, Adobe and Gap and have begun to offer more frequent employee check-ins where an employee’s performance is evaluated using a coach-approach that enables minor course corrections and improved performance. For many employees, this isn’t a performance review as much as it is a manager-as-coach or mentor session. Over 10% of Fortune 500 companies had moved away from the annual performance review in favor of this more frequent approach that resembles a DER.

According to Paul D. Hamerman and Claire Schooley of Forrester Research, "Feedback given once a year or every six months is not often enough to meet the ever-changing pace of business. Only 6% of all organizations believe their current performance management process is worth their time.”

Essentially, the performance review process is just not working.

Performance Is based on a mutually understood set of key accountabilities

It's not enough to just have key responsibilities and KPIs; the employee must understand them. Your expectations should not be a surprise to the employee if the key accountabilities were discussed with at the time they entered the role and have been revisited on a quarterly basis (or more often).

Watch Out. Assigning responsibilities outside an employee’s key accountabilities without getting their feedback and buy-in is begging for trouble. And some employees may be afraid to speak up and let you know that what you're asking them to do is unreasonable or worse, the employee doesn't have the capability to do the job. For a high-performer/high-potential (I coined this HP²), additional duties outside the key accountabilities need to be clearly communicated as growth and development work.

"Performance Reviews are Less About the Employee and More About the Manager"

Performance reviews are, among other things, meant to provide feedback to the managers who are performing the review. It has been said that people leave managers not companies. While this isn't always true, a performance review can help managers understand how well they have communicated performance standards and engaged their direct reports. If employees are surprised by a manager's feedback, something is wrong, and a good part of the blame goes on the manager.

Performance Development and Engagement Decision Tree

Tap the image to view.

About Carl Nielson

Carl Nielson is an organizational development and leadership development coach who enables managers and high-potentials to build and engage high-performing teams. Carl offers Leader as Coach training to individuals (leadership coaching) and groups (cohorts of managers or high-potentials, onsite or virtual). Carl also assists organizations with hiring and job-fit assessments. Learn more at https://www.nielsongroup.com. To start a conversation with Carl, schedule a convenient time here: https://my.timetrade.com/book/2L3GC.

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