A report by the Society for Human Resource Management (SHRM) revealed that "95% of employees are dissatisfied with their company’s performance review process. Furthermore, 90% do not believe the results of these processes are accurate."

Year-end is often a busy time for leaders, filled with employee performance reviews. These reviews are crucial, as they directly impact the development of individuals and the organization as a whole. However, if not conducted properly, performance evaluations can backfire.

Four Common Mistakes in Employee Performance Reviews:

1. Poor Preparation The most common mistake is a lack of thorough preparation. Some managers treat performance reviews as mere formalities to tick off the HR checklist. Overwhelmed with year-end tasks and managing large teams, they allocate only a few minutes to each review. As a result, employees receive only cursory feedback on their achievements, areas for improvement, and development plans.

2. Focusing Only on Recent Events Another mistake is evaluating employees solely based on recent work (the Recency Effect). This approach is unfair as it neglects the employee's contributions throughout the year. Imagine watching only the beginning and end of a movie — you might grasp the general story but miss critical details, making it impossible to evaluate the film accurately.

3. Ineffective Feedback When giving feedback, managers often make the following errors:

• Focusing only on flaws without exploring solutions. For example, saying, “You often miss deadlines,” instead of identifying causes and proposing fixes.
• Jumping to conclusions without providing specific examples. For instance, saying, “You don’t take your work seriously,” instead of citing a concrete example like, “Last week, you missed two reporting deadlines.”
• Providing vague feedback. Statements like, “I’m very disappointed in your performance,” leave employees unclear about what needs to improve.
• Using the “sandwich feedback” technique ineffectively, which can dilute the impact of constructive criticism. These mistakes make it difficult for employees to recognize and work on their development areas.

4. Linking Pay Raises to Performance Reviews This common error undermines the true purpose of performance reviews, reducing them to conversations about salary adjustments or promotions. At its core, a performance review should focus on discussing the employee’s work effectiveness, not their paycheck. However, this approach often shifts the employee’s attention to whether they’ll receive a raise, rather than how they can contribute more to the organization.

What Can We Do to Avoid These Mistakes?

1. Don’t Wait Until Year-End for Performance Reviews Waiting until year-end for performance reviews is impractical. Besides the Recency Effect, this approach can make employees feel targeted, as if asking, “Why didn’t you mention this when it happened?” Instead, managers should provide regular evaluations and feedback. A Gallup survey found that employees are 2.7 times more engaged when they receive weekly feedback. This practice lightens the year-end review process by focusing on recent work and setting specific goals.

2. Improve Feedback Skills, But Don’t Stop at the Surface While developing leaders' feedback-giving skills is important, it only addresses the surface. Building a psychologically safe environment where employees feel heard and understood is a vital foundation for effective feedback. Employees will only embrace feedback when they feel open and proactive about their growth.

3. Focus on Employee Development, Not Criticism Rather than treating reviews as tools for ranking or reprimanding, leaders should view them as opportunities to discuss each employee's growth potential. Collaborate to identify strengths, skill gaps, and create measurable development plans.

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