5 Common Employee Performance Review Mistakes (And How to Solve Them)

Only 39% of human resource professionals think their performance management process actually improves employee performance, according to a 2022 HR.com study. It’s an understandable dilemma—there are a lot of moving parts to performance management—employee and manager one-on-ones, employee development plans, performance reviews, organizational performance, and more. If you want to improve the process, where do you start? And how can you make sure you’re helping your people make tangible progress?

This article digs into the top employee performance review mistakes that can damage an otherwise solid performance management process. We’ll also cover how to solve them, so you can better help your employees and your business succeed.

Looking for more ways to optimize performance management? BambooHR streamlines the review process for HR pros, managers, and employees, making it simple to customize review cadences and questions, set and track goals, and analyze performance data. Learn more with a free trial today.

Mistake #1: You Aren’t Giving Your HR Team the Right Tools

We’ve all heard it by now: Annual reviews are out, and continuous feedback is in! But there are still plenty of companies who stick to a less-than-optimal schedule, according to Lattice.

• 31% of companies only do employee performance reviews 1x a year
• 27% of companies only do them 2x a year

As Gallup points out, “many organizations know continuous feedback is best but struggle with activating the ongoing behaviors needed to achieve it at scale.” So the problem isn’t lack of knowledge, but how to actually roll it out. But what’s the key?

HR teams—with the right tools to help HR set up more frequent performance conversations.

In the same Lattice research, high-performing HR teams are more likely to run quarterly performance reviews. But what sets these high-performing HR teams apart from underperforming teams is how they get to that frequency: they’re more likely to rely on performance management software.

Solution: With better support from technology, HR has the tools they need not only to implement a core best practice—continuous performance feedback—but also collect crucial performance data and take action to improve business efficiency.

More data isn’t just good for the company, it’s good for the employees too. “Data allows a company to better understand its workers, but it should work the other way as well,” Ruth Hartgen, PHR and Director of HR at HRCI, explains. “Well-informed employees gain a better appreciation of their role in the business strategy, which supports more purposeful engagement.”

Mistake #2: You Aren’t Training Managers on How to Do Employee Performance Reviews

Katrina Kibben, founder of Three Ears Media and hiring expert, makes this crucial observation: “[T]he reality is that most (if not all) managers have never taken a course in being a great manager.” And for something so crucial to business health as employee performance, less-than-stellar (or plain non-existent) manager training isn’t going to cut it.

Unfortunately, that seems to be the norm. In research by HR.com:

• Only 36% of HR pros say managers at their organization are well trained in managing performance.
• Only 27% say managers are good at managing performance overall.
• 65% don’t think their managers are good at having conversations about workplace performance and behaviors.

Solution: Putting more frequent performance reviews in place won’t do much to improve performance if all managers have to rely on is their own experiences, which can easily leave the door open to vague or subjective feedback and unconscious bias.

Instead, train managers to adopt a coaching approach to employee performance reviews.

Kibben suggests taking the following approach: “Build [manager training] based on your values, your process, and your strategies. It must be custom to you—how they work with you. ... Most importantly, make it a standard education step before someone can become a manager or make a hire.”

» Learn More: The 40+ Best Performance Review Questions

Mistake #3: You Aren’t Including Employee Development in Performance Reviews

Employees expect their organization to give them growth opportunities. According to a BambooHR study, it’s one of the top things that helps them feel satisfied with their employer and makes them want to stay:

• 62% Supportive work environments
• 59% Growth opportunities
• 51% Compensation geared towards how much effort/work an employee puts forth
• 39% Clear and transparent paths to promotion
• 37% Company culture and values that I believe in

If you don’t include career development in your employee performance reviews, you’re setting your business up for unsatisfied employees and a higher turnover rate. Case in point: the top reasons people quit between 2021 and 2022 was because they weren’t given opportunities to grow and advance.

Solution: Employee development can’t be left up to chance or happy coincidence. Organizations need to make it a formal part of the continuous employee performance review process.

One example of this is employee development plans. Most importantly, these plans should include three key elements:

1. Organizational needs: By considering the organization first, you’re ensuring employee development feels purposeful and relevant both for the individual and the business.
2. Individual competence: Of course, managers should also consider employee competence and the skills they can sharpen to benefit that employee’s career.
3. Individual interest: Managers should look for ways to connect an employee’s existing passions to what the business needs, which helps motivate the employee to accomplish their goals and keeps them engaged in their own development.

Mistake #4: You’re Leaving the Performance Review Process Up to Each Team or Department

The good news is most businesses (93%) are doing some kind of performance management. The bad news is more than half say it’s not a formal or structured process, and 39% don’t keep track of their managers’ formal employee performance reviews.

Without a structured process and data gathering, your business can’t be strategic about hiring or accurately forecast your business needs.

As Ruth Hartgen, PHR and Director of HR at HRCI explains, “HR should be responsible for executing strategies, processes, and approaches related to integrated performance management. This goes back to [having an] integrated talent strategy, which stems from the underlying business strategy and aligns the workforce to business priorities.”

Solution: If you haven’t already, you need to put HR firmly at the helm of performance management initiatives and empower them to create an official strategy, outlining:

• What high performance looks like for your business
• The recurring cadence for employee performance reviews (e.g., quarterly or monthly)
• Questions and topics managers need to address during each review
• Career development resources, support, and opportunities the organization has or plans to make available to employees
• The specific data HR needs to collect from employee performance reviews (and a method for collecting and analyzing it)

Performance management software can help HR standardize this across the organization and will be especially crucial for tracking and analyzing performance data.

Mistake #5: You Aren’t Tying Employee Performance Reviews to Company Goals

Closely related to installing a structured process is aligning the purpose of employee performance reviews to your organization’s goals. Certainly, improving employee performance is the priority, but it’s in service of improving business performance.

Yet, only 44% of HR pros say their performance management process actually helps their organization meet its performance goals.

Solution: Again, tackling this performance review problem starts with putting HR at the controls of your performance management process. They’re the best suited to provide “standard metrics across the company [to keep] each department aligned,” Hartgen suggests. “HR can tie all of the pieces together by linking performance measurement to KPIs to track growth and progress over time.”

Organizations can make it easier and faster for HR to implement and collect employee performance data through software tools. Depending on the performance management software, HR can also see how individual and departmental performance funnels up into company performance, and then share this information with the rest of the organization.

Effective department leaders and managers understand their employees and their role in the business, but HR can unlock the bigger picture for them. By helping managers become more purposeful with employee performance reviews, HR can finally make a real impact on overall employee performance for the company.