Performance Reviews: Worth it or rubbish?

Ask ten business owners what they think of annual performance reviews and you'll get ten different answers. Some swear by them. Others have ditched them altogether. Shaz and Adam could argue about them ‘til the cows come home. Most fall somewhere in the middle: running performance reviews out of habit, vaguely aware they could be better, not quite sure what better actually looks like.

So! Our short take? Yes they’re worth it, but only if you’re doing them properly. If your version is half-arsed? In the bin, now! 

Our longer take? Keep reading for the pros and cons, our verdict and whether performance reviews make sense for your business. 

The argument for performance reviews

They create space to properly pause.

When a business is moving fast, it's easy to stay locked onto what's next. Many of us are great at the forward-thinking part, and need some serious work on our stopping-to-celebrate-skills. The annual review forces a deliberate stop; they’re a chance to look back at growth, contribution and impact over a longer stretch. That kind of reflection is harder to manufacture in the day-to-day, and it matters.

They help create clarity and consistency.

A structured review process can bring alignment across a team: what strong performance looks like, what behaviours you actually value, and how people can continue to grow. Without that structure, expectations have a way of becoming different for different people, creating problems down the track.

They support fairer progression conversations.

When remuneration and progression are discussed reactively (often with whoever asks the loudest), decisions end up feeling subjective and inconsistent. Adam has some very strong feelings on this topic… just ask him. Or don’t, if a rant wasn’t on your to-do list today.

A formal process gives those conversations a more transparent foundation and should make the business owner’s response an easy one. It doesn't eliminate subjectivity, but it grounds decisions in something more than instinct. One of the more obnoxious things we can do as senior leaders in a business is to give the classic “I just don’t feel like you’re there yet” response, without any kind of direction on what “there” actually means. (If you just read that sentence and thought… oops… call us!).

They surface contributions that might otherwise go unnoticed.

Not all great work is loud – in fact a lot of the time, it’s the opposite. Reviews create a dedicated moment to acknowledge the consistent performers, the collaborators, the people who just quietly make things work. Left to the rhythm of the everyday, that work often goes unremarked. Noticing it and acknowledging it makes people feel valued (as they should be) and this goes a long way towards cultivating engaged, motivated employees who want to stick around.

They encourage intentional development conversations.

Done well, a review shifts the conversation beyond delivery and into growth. Where does this person want to go? What capabilities do they want to build? What support do they need? That's a conversation worth having, and the annual review is often the only time it actually happens.

The argument against performance reviews

Feedback that arrives once a year is often too late to be useful.

Growth is usually driven by timely conversations that happen in or close to the moment, when context is still fresh and there's actually something to work with. If important feedback only surfaces in the annual review, it's often arriving long after the window to act on it has closed.

We don’t know about you… but our memories aren’t our strongest suits.

Trying to recall behaviours, outcomes and context of things that happened ten months ago just isn’t realistic. And if you can do that, tell us your secret?? Recent events carry disproportionate weight for this reason. Difficult periods earlier in the year can fade. Standout moments from the last month can overshadow a year of consistent work. A once-a-year snapshot rarely captures the full picture accurately, and that’s simply unfair.

They can easily become an administrative exercise.

Heavy on templates, ratings and tick-boxes *snore*. Light on honesty, development and actual conversation. When a review process starts to feel transactional, people go through the motions and nothing meaningful comes out the other side. If this is how yours are feeling, they’re firmly falling under the “rubbish” category – chuck them in the bin.

Combining performance, pay and progression in one conversation can be a bit too hardcore.

When everything sits in the same meeting, people can shift into evaluation mode rather than genuine openness. It’s giving less “let’s have a really useful chat” and more “come to the principal's office so we can review four terms of reports at once”. 

You want to avoid putting employees in the position of feeling like they need to perform in the performance review. Honesty both ways is the only way it works well.

They can reinforce the wrong dynamic.

Traditional reviews can position leaders as judges and employees as defendants, which is about as far from a growth culture as you can get. When people don't feel safe in the conversation, they won't tell you what's actually going on.

They take something we’re all lacking: time and energy.

For smaller teams especially, a full review cycle can become operationally heavy. If the output isn't meaningfully improving performance or development, that's a lot of effort to justify.

So, what's the verdict?

Performance reviews aren't the problem. Treating them as the solution is where it goes wrong.

The businesses that get the most out of formal reviews are usually the ones that don't rely on them exclusively. They've built a culture where feedback happens regularly and naturally, rather than saving it up and delivering in one painful conversation. They work where expectations are made clear throughout the year, not revealed in one chat. Growth conversations should be ongoing, not annual. Recognition shouldn’t require a calendar reminder.

When that foundation is in place, the annual review stops being a moment of reckoning and becomes something more useful: a chance to consolidate themes, celebrate progress, and align on what's next. Less judgement, more direction.

The review itself isn't the issue. It's leaning on the review to do work that should be happening all year that gets businesses into trouble.

Are you taking or leaving it?

Take it if your review process is genuinely built around honest conversation, clear expectations and forward-thinking development – if the foundations are set and worked on throughout the year. If this is you, firstly here’s a high five. Secondly, keep the reviews up – they’re a valuable touchpoint worth protecting.

Leave it (or at least rethink it) if your current process is mostly paperwork, mostly retrospective, and mostly dreaded by everyone involved. That version isn't serving anyone. We’ve got the heebie-jeebies just thinking about it.

Want to go deeper? Our blog on what's actually included in a good performance review breaks down the five elements every review should cover, from clear expectations to accountability to future growth.