Performance Reviews and Guided Distribution: A Necessary Evil or an Outdated Practice or something else...?

As we dive into the season of performance, evaluations, salary reviews and feedback sessions, maybe it’s right time to address the elephant in the room: Are performance reviews and guided distribution truly serving their purpose, or are they inadvertently harming employee morale and productivity?

The purpose of the text is to educate, involve and provoke readers to share insights since the topic is one of the hot ones in today’s business world.

The Good: What Performance Reviews?Should?Be Doing

??Structured Feedback:?When done right, reviews provide a roadmap for employee growth. They highlight strengths, pinpoint areas for improvement, and foster development.

??Goal Alignment:?They should connect individual efforts with organizational objectives, ensuring everyone is rowing in the same direction.

??Recognition & Rewards:?Top performers deserve acknowledgment. In theory, reviews ensure they’re rewarded for their impact.

The Reality: Where It Gets Messy

???Bias & Politics:?Even with training, personal biases creep in. An employee who challenges the status quo might be rated lower than a “yes-person.” A manager’s favorite gets an edge, while a quiet performer goes unnoticed.

???Stress & Anxiety Over Performance:?Let’s be honest—how many employees actually look forward to performance reviews? The looming fear of judgment can be paralyzing, leading to defensive behavior rather than real growth.

???The Myth of Guided Distribution:?Companies often claim ratings are ‘guided,’ but behind closed doors, it’s a numbers game. A leader at a global company said to the management team to fit the distribution and, they were?forced?to downgrade ratings to fit quotas. The result? Frustration, resentment, and high attrition in pretty short period of time.

For the ones who remember the cartoon: F I X E D, strange way to spell DISTRIBUTED

https://youtube.com/shorts/XZGdsRsOSoU?si=-lzIFEWcvg4bElBx

The Ugly: The Side Effects No One Wants (only for the brave ones) to Talk About

??Demotivation:?Imagine delivering exceptional work all year, only to receive an “average” rating because someone else had to get a higher one. How long before that employee starts job hunting?

??Toxic Competition:?When rankings pit employees against each other, collaboration takes a backseat. Instead of helping each other succeed, people focus on looking better than their peers.

??Legal & Ethical Risks:?Companies have faced lawsuits over unfair performance evaluations. Biases in rating systems can expose organizations to discrimination claims, further eroding trust.

The Perspective Dilemma

?????The Manager’s Struggle:

• Pro:?A structured approach to promotions and raises.
• Con:?How do you tell an engaged, high-performing employee they’re ranked lower?because the system demands it?
• Example:?A manager in a global company was pressured to lower scores despite an entire team exceeding expectations—just to meet “calibration” targets.

Peter F. Drucker: "The fundamental task of management remains the same: to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change."

?????The Employee’s Reality:

• Pro:?A chance for feedback and career progression.
• Con:?A process that often feels like a judgment rather than an opportunity to grow.
• Example:?An employee who exceeded the projects and set targets but still got a “Meets Expectations” rating because “Exceeds” was limited to a small percentage, and created so called “corridor chat” among colleagues with various implications to morale, commitments and in the end results.

Meghan M. Biro: "Employees engage with employers and brands when they’re treated as humans worthy of respect."

?????HR’s Balancing Act:

• Pro:?A standard process to evaluate performance across the organization.
• Con:?Managing grievances, morale issues, mental health and retention risks when employees feel the process is unfair.
• Example:?A company rolled out “anonymous” peer feedback but later found that employees were using it to settle personal scores rather than provide constructive input, or even worse creating people, ethics and/or compliance issues throughout the company.

Jack Welch: "There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it."

A Call to Action: Time to Rethink Performance Reviews?

Instead of force-fitting employees into a rigid rating system, what if we:

• Focused on?continuous feedback?rather than one-time evaluations?
• Prioritized?development-based discussions?over subjective rankings?
• Empowered managers to?reward actual contributions, not just play the numbers game?
• Is it possible to reinvent the wheel or the system needs fresh start or something else?
• What if we…….

Sam Walton: "Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune."?

*The text is written with assistance of AI tools