💸 Why Performance Reviews Won’t Die

Week 27, 2025—Issue #368

File this under #businessresilience

A few weeks back, the people at Corporate Rebels shared a slide deck titled Performance Reviews Suck.

They framed their argument as follows:

Performance reviews are meaningless.
Painful. Annoying.
👉 Discussing work you did 6 months ago…
👉 With a manager who wasn’t there…
👉 Using metrics nobody understands…
👉 To justify decisions already made.

Nope, it doesn’t make sense.
You know what does?
🔥 Real-time dialogue
🔥 Peer-to-peer conversations
🔥 1:1 development talks
|🔥 360-degree feedback

Judging by the number of comments, the post hit a nerve. And the consensus seems to be that we know what helps people grow, and we know that performance reviews aren’t it.

I agree. I’ve hated them my entire career. And across 20+ years in Europe, the US, and Asia, I’ve yet to meet anyone who likes them.

And yet, they persist.

Why?

Because they were never really about learning and development.

They’re about compensation.

We need some way to decide who gets promoted and who doesn’t. We need some way to justify our compensation decisions. So we hold on to a broken ritual—not because it works, but because we lack a better mechanism.

Yes, we want learning and feedback, etcetera. But they’re (unfortuantey) not the prime motivator.

We won’t fix performance reviews until we solve the compensation problem first.

/Andreas

P.S. I wish I had a “better mechanism” ready and waiting. I don’t — at least not yet. But #309 and #310 explore what I believe is the real blocker: how centralized compensation locks us into top-down systems. Until we unbundle financial risk and give teams more autonomy (think micro-businesses ) we’ll keep clinging to broken tools like performance reviews.

Sidenotes

🤖 The Future of Work

Laszlo Bock, Google’s former Head of PeopleOps and current CEO of Humu, took to Linkedin this week to share his thoughts on AI and the future of work. Apart from sharing a great primer for how LLMs work, Bock also predicts that there will be fewer offshore, entry-level, and transactional jobs in the near term, followed by a shortage of quality managers in 4–7 years.

⚙️ Taking Shape

ShapeUp is a product development method from Basecamp (see #145). It’s often criticized for its “long” 6 to 8-week development cycle which creates space for discovery (what the Basecamp team calls “shaping”). But as Engineering Director Tim Drisdelle points out, other teams don’t skip this work — they just do it without structure. ShapeUp doesn’t add process; it makes the invisible explicit.

How can we build better organizations? That’s the question I’ve been trying to answer for the past 10 years. Each week, I share some of what I’ve learned in a weekly newsletter called WorkMatters. Back issues are marinated for three months before being published to Medium. This article was originally published on Friday, July 4, 2025. If you are reading this you’re missing out. Subscribe now and get the next issue delivered straight into your inbox. 😁