As the year winds down, many organizations are gearing up for annual performance reviews—a practice often seen as a cornerstone of professional growth. But are these reviews truly driving meaningful progress, or have they become a mere formality?
Traditional performance reviews often fall short of their intended purpose. According to Gallup, many employees feel these reviews are neither fair nor accurate. Harvard Business Review echoes this sentiment, highlighting the limitations of this approach. While the goal is to foster development and alignment, the reality is that these reviews often leave both employees and managers questioning their value. Why is this the case? Focusing on a few leadership development areas might give us refreshing insights:
A leader’s ability to approach effective performance reviews is rooted in strong self-awareness and emotional intelligence. By recognising personal biases, such as recency bias, favoritism, and overestimating certain employees’ contributions, leaders can ensure fairness, objectivity, and balanced and constructive feedback in their evaluations. Furthermore, cultivating emotional intelligence and self-awareness is also essential for leaders to manage their reluctance towards performance conversations, preventing delays and inconsistencies that can undermine employee morale. By developing self-leadership, leaders can continually improve their performance review practices and foster a culture of trust and open communication.
While self-leadership sets a strong foundation, effective people-leadership is central to the success of performance reviews. Conventional approaches often focus on leaders’ abilities to hold their teams accountable, however, Arbinger’s work revealed that by shifting from “holding people accountable” to “developing accountable people”, leaders can create a safer and more supportive environment where employees are committed to business results, and feel comfortable receiving feedback.
Effective performance reviews also serve as a mirror to an organization’s health, reflecting its systemic strengths and weakness — they go beyond individual conversations, illuminating the underlying organizational culture, leadership practices, and resource allocation.
Leaders, inevitability, play critical roles in shaping, implementing, and maintaining effective performance review processes. By developing skills to analyze the current system, leaders can identify areas for improvement, such as streamlining the process, reducing administrative burdens, and enhancing the focus on development. Collaborating with HR and other stakeholders, leaders can develop performance management systems that align with the organization’s strategic goals and values. Additionally, by promoting a culture of continuous learning and innovation, leaders can ensure that performance reviews evolve to meet the changing needs of the organization and its employees.
By addressing these multifaceted challenges, organizations can transform performance reviews from a mere formality to a strategic tool for growth and development. Have you considered a holistic approach to leadership development that tackles all three dimensions—Self-Leadership, People-Leadership, and Systems-Leadership— simultaneously?
At Arbinger, we understand the interconnectedness of these leadership dimensions. Our approach empowers leaders to shift their mindset, mitigate biases, enhance emotional intelligence, and foster cross-functional collaboration. By addressing these foundational elements, leaders can create lasting impact and drive organizational transformation.
A shift in the way your organization conducts performance reviews can be transformational for not only your employees — but your business as a whole. We dig deeper into this topic (and more) in our 2025 trends report. Download a copy here!
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