In workplaces where time is scarce and priorities are in constant flux, few routines stir as much anxiety or skepticism as the performance review. Long a fixture of corporate life, the review is often seen by employees as a bureaucratic hurdle and by managers as a box to check.
But as expectations for work evolve, so too does the role of performance management. Even HR employees are now expected to have the SHRM certification under their belt. Once dominated by annual assessments and numeric rankings, today’s leading organizations are replacing outdated models with more frequent, focused conversations designed to foster learning, trust, and accountability.
“Traditional reviews are fundamentally backward-looking,” said Dr. Tasha Eurich, an organizational psychologist and author of Insight. “That’s no longer useful in a work environment where change happens continuously.”
In this guide, we explore what makes performance reviews effective in 2025—and how HR leaders, managers, and organizations can use them not only to measure progress but to support it.
Why Performance Reviews Still Matter
Despite their reputation, performance reviews remain one of the few structured moments when employees receive dedicated attention from their managers. Done well, they provide clarity, recognition, and direction.
Done poorly—or not at all—they can erode trust, damage morale, and even contribute to attrition.
“Employees want to know where they stand,” said Josh Bersin, a global HR industry analyst. “They want feedback that is relevant, timely, and focused on helping them grow.”
That relevance is more critical than ever in a workforce that’s more remote, more diverse, and more dynamic than in decades past.
From Annual Reviews to Continuous Feedback
Perhaps the biggest change in recent years is the shift away from annual reviews toward ongoing feedback models.
In 2012, Adobe eliminated formal performance ratings altogether and launched a “check-in” model, which emphasizes quarterly conversations about goals and development. The move saved thousands of manager hours—and helped reduce voluntary turnover by 30%.
Following suit, Deloitte abandoned its once-a-year ratings system in favor of weekly check-ins, which focus on short-term priorities and coaching.
“The old model assumed that people and performance were static over long periods,” said Natalie Baumgartner, chief workforce scientist at Achievers. “That assumption doesn’t hold anymore.”
Today, companies from startups to Fortune 100 firms are embracing real-time feedback, especially within project-based teams and hybrid work environments.
Step 1: Set Clear, Personalized Expectations
Before a review can be productive, both manager and employee need a shared understanding of what’s expected—and why it matters.
“Ambiguity kills performance,” said Gallup researcher Jim Harter. “Yet less than half of employees strongly agree that they know what’s expected of them at work.”
To combat this, HR teams are developing individualized goal-setting frameworks tied to team and organizational outcomes. Objectives and Key Results (OKRs), for instance, are increasingly used to replace rigid KPIs.
The best systems are collaborative. Employees co-create goals with managers, ensuring they’re both meaningful and measurable.
Step 2: Prepare with Data—But Keep It Human
Preparation is critical. Yet too many reviews rely on manager memory or vague impressions.
Instead, high-performing organizations use multiple sources of input, including:
- Project evaluations
- Peer feedback
- Self-assessments
- Data from collaboration tools or CRM platforms
That data, however, is a starting point—not the full picture.
“The best reviews combine structure with empathy,” said Liz Ryan, founder of Human Workplace. “You need to see the person behind the metrics.”
Experts recommend reviewing notes throughout the year, not just at the deadline, and making space for emotional intelligence—what the employee has experienced, not just what they’ve delivered.
Step 3: Make It a Two-Way Conversation
A common mistake is treating the review as a verdict rather than a dialogue.
The most effective reviews begin with self-reflection—what the employee feels went well, what didn’t, and where they want to grow. Managers should ask open-ended questions and actively listen.
“Listening well is half the work,” said Eurich. “Employees often reveal what motivates them, or what’s holding them back, if you give them the space.”
HR teams at companies like Salesforce and Unilever are training managers in active listening, bias awareness, and structured interviewing to support this approach.
Step 4: Focus on Development, Not Just Evaluation
Performance reviews often center on what’s already happened. But forward-looking conversations are more likely to drive change.
That’s why progressive companies include career development goals, learning pathways, and even stretch projects as part of their review outcomes.
One model, used at Microsoft, separates performance from potential. Employees are encouraged to reflect on long-term aspirations, with managers acting as coaches rather than judges.
“Reviews should help people get better—not just tell them if they’ve been good enough,” said Bersin.
Step 5: Follow Up and Document
What happens after the review is just as important as what’s said during it.
Too often, feedback is given, recorded, and then forgotten. To prevent that, top-performing HR teams create post-review action plans—brief, trackable documents that include agreed-upon next steps, resources, and timelines.
Regular check-ins (weekly or biweekly) then serve as course corrections, reinforcing goals and offering space to revise them if needed.
“Without follow-up, the review becomes a performative exercise,” said Baumgartner. “With it, it becomes a tool for transformation.”
Common Pitfalls to Avoid
- Rating Biases: Recency effects, affinity bias, and contrast errors can distort fairness. Training and anonymized calibration help mitigate this.
2. One-size-fits-all Templates: Different roles require different metrics. Templates should be flexible enough to reflect actual work.
3. Lack of Psychological Safety: When employees fear consequences, they won’t share honestly. Leaders must create safe, trust-based environments.
4. Overreliance on Tools: Software can organize, but it can’t replace human connection. Tech should support—not substitute—the review process.
A Changing Definition of “Performance”
As work becomes more collaborative, digital, and distributed, performance reviews must evolve in tandem. Increasingly, they’re less about ranking individuals and more about understanding how each person contributes to team success and long-term growth.
That evolution requires rethinking not just forms and timelines, but mindsets.
“Performance management isn’t just an HR responsibility,” said Harter. “It’s a leadership responsibility. It’s how culture gets built.”
The Bottom Line
Performance reviews will always be imperfect. But when designed and delivered thoughtfully, they become more than a procedural task—they become a catalyst for engagement, retention, and growth.
At a time when organizations are under pressure to retain top talent and deliver value, there may be no better investment than a conversation that’s honest, structured, and focused on the future.
If the old review was a mirror, today’s best versions are windows—offering employees a clearer view of where they are, and where they could go.
