Performance reviews, also called performance appraisals, are essential tools for employee development and organizational success. However, common mistakes can make them ineffective or even counterproductive. Below are ten critical mistakes to avoid, supported by academic insights and expert recommendations to enhance fairness and effectiveness in evaluations.
1. Lack of Preparation
In a full agenda, managers struggle to allocate time for the preparation of performance reviews. As a result, they rush into a review without reviewing past performance data, leading to vague or inconsistent feedback.
A poorly prepared performance review can lead to missed key points, inaccurate assessments, and an unproductive discussion. Managers should review employee performance over time, collect specific examples, and structure their feedback to ensure that evaluations are objective and comprehensive.
When managers fail to prepare, they risk making judgments based on memory rather than documented evidence, which can introduce bias and inaccuracy.
📌 Take at least 30 minutes to prepare each performance review. Collect data about achievements and list all the points you want to discuss.
2. The Halo Effect (Bias in Evaluations)
The halo effect occurs when one standout trait—whether positive or negative—overly influences the overall evaluation. This can lead to an unfairly high or low rating that does not accurately reflect the employee’s full range of work performance.
An employee who is always punctual and well-dressed may receive an excellent overall review, despite struggling with key job tasks. Conversely, an employee who made one significant mistake may receive an overall poor review despite a year of strong performance.
📌 To avoid the Halo Effect, gather facts for the review period and compare the skill profile of the employee with the role expectations.
3. The Recency Effect (Nikolaus Effect)
The recency effect happens when the most recent events in an employee’s performance overshadow their overall work throughout the review period. A strong or weak performance in the final weeks before a review can unfairly impact the evaluation, leading to inconsistent ratings.
📌 Maintain a log with all achievements of the employees during the review period. If you have feedback about a behavior to improve, share it as soon as possible. Keep a log of it to track the progress on a particular skill.
4. Similar-to-Me Bias
People tend to unconsciously favor colleagues who share their interests, background, or personality, leading to potential unfairness and favoritism.
As a result, only people who are similar stay in the organization, which leads to Group Think, a negative effect when people prioritize consensus over critical thinking and alternative viewpoints.
📌Base the performance review on objective facts and observed behaviors, comparing them against the role’s expectations.
5. Unclear Evaluation Criteria
Without clearly defined, measurable goals, performance evaluations become subjective and inconsistent. Employees must understand expectations to improve effectively. Setting transparent, structured goals ensures that employees and managers have a common reference for success.
A company evaluates employees on “innovation” but does not define what it means in their role. Employees struggle to understand how to meet expectations.
📌 If you want to evaluate people on their innovation skills, explain what is expected to them. Give examples of behavior that you have already observed, like bringing concrete ideas that have a positive impact on their perimeter.
6. Infrequent Feedback
According to Buckingham and Goodall (2019), annual performance reviews alone are insufficient. Employees need continuous feedback to stay engaged and improve.
When you provide feedback only once a year, the employee would be surprised by criticisms that could have been addressed earlier.
📌 As soon as you notice a behavior that can be improved, organize a quick call and share your insight in a one-to-one as soon as possible. Feedback is a gift!
7. Focusing on Personality Instead of Behavior
Performance evaluations should assess work-related actions rather than personal characteristics, which can be subjective and introduce bias. Moreover, negative feedback on personality traits can be demotivating, as personality is something that cannot be easily changed.
📌 Instead of saying, “You’re too introverted to lead a team”, say: “In the last team meetings, I’ve noticed you have not contributed to the discussion. Let’s explore ways to help you share your insights more effectively.”
8. Lack of Follow-Up After the Review
It happens unfortunately two often. An excellent conversation leads to no improvement because no concrete action was agreed between the manager and the employee.
Every performance review should have actionable plans. Without follow-up, improvements may not be implemented.
📌Document goals for the next performance review period. Agree on which skill should be developed and plan training in the development plan of the employee.
9. The Feedback Sandwich Approach
The feedback sandwich technique involves delivering feedback by starting with positive feedback, addressing areas for improvement in the middle, and closing with another positive remark. While well-intentioned, this method can be problematic if not executed properly.
For example, a manager tells an employee, “You’re a great team player, but your project deadlines have been inconsistent. However, your communication skills are excellent.” The critical feedback gets lost between the positives, reducing its impact.
Why It’s a Mistake: Employees may focus only on the positive remarks and disregard the constructive criticism. Alternatively, they may see the praise as insincere, diminishing its effectiveness.
📌 Do not “hide” negative feedback into positive one. Share positive feedback only if it is sincere and not as compensation for negative feedback.
Using a Software to avoid common mistakes in performance reviews
Software for performance reviews makes life easier for managers by:
- Gathering data about the performance and growth of the employee
- Saving time for the preparation of performance reviews
- Performing reviews based on regular 360 feedback
- Documenting actions in a development plan
- Linking performance reviews with skill development
Conclusion
Avoiding these mistakes leads to a fairer, more effective performance review process. Bias awareness, structured evaluations, and continuous feedback help create a productive review culture that fosters employee growth and engagement.
References
- Performance Appraisal Page on Wikipedia
- Murphy, K. R., & Cleveland, J. N. (1995). Understanding Performance Appraisal: Social, Organizational, and Goal-Based Perspectives. Sage Publications. This book emphasizes the importance of preparation for performance evaluations and discusses cognitive biases that may distort assessments.
- Nisbett, R. E., & Wilson, T. D. (1977). The Halo Effect: Evidence for Unconscious Alteration of Judgments. Journal of Personality and Social Psychology, 35(4), 250–256. This study explains how first impressions and singular attributes can unconsciously influence broader evaluations, distorting performance assessments.
- Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124-1131. This foundational paper explores how cognitive biases, including recency bias, affect decision-making and performance evaluations.
- Landy, F. J., & Farr, J. L. (1980). Performance Rating. Psychological Bulletin, 87(1), 72-107. This review discusses how interpersonal similarities between managers and employees can bias performance ratings and impact workplace fairness.
- Buckingham, M., & Goodall, A. (2019). Nine Lies About Work: A Freethinking Leader’s Guide to the Real World. Harvard Business Review Press. This book argues for continuous feedback over traditional annual reviews.
- Kluger and DeNisi (1996), The Effects of Feedback Interventions on Performance: A Historical Review, a Meta-Analysis, and a Preliminary Feedback Intervention Theory.