The next time you shudder in anticipation of a performance review, remember that you’re not alone. There’s a growing concern in the business world that performance reviews don’t work. They sap productivity, lower morale, disrupt teamwork and fail to reward the right people. Even the first performance reviews in recorded human history — performed during the Wei Dynasty in China in the Third Century — were considered biased.

Innovative companies are taking a fresh look at performance management, and many are streamlining the performance review process or eliminating it completely. Many major organizations, including Deloitte, Accenture and Microsoft, have already moved to radically revise their performance management approaches. The research backs this shift in thinking. According to a survey by advisory firm CEB:

  • 95 percent of managers are dissatisfied with their current evaluation system.
  • Nearly 50 percent of managers have already, or are considering, removing performance ratings altogether.
  • Only 4 percent of HR leaders believe their companies are assessing performance accurately.
  • 83 percent of respondents say that their current processes and policies must change.

    “Performance reviews are fundamentally broken. Managers hate them and fear them and resent the drain on their time,” writes author and speaker Alexander Kjerulf. “Employees often leave reviews demotivated, cynical and with no clear idea of how well they’re doing and how to improve."

    Here are the reasons why performance reviews don’t work, and what can be done about it.

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