Performance management. Just hearing the term might make you think of those dreaded annual reviews: awkward, stiff meetings where your boss dusts off a list of your “achievements” (read: things you did five months ago) and a handful of “areas for improvement” (things you forgot to do six months ago). Let’s face it: traditional performance management feels like trying to drive forward while staring in the rearview mirror. Spoiler alert: that’s not going to end well.

It’s time we overhaul these outdated systems and shift our focus from performance management to performance development—a forward-looking, growth-oriented approach. This shift isn’t just about adding more buzzwords to the HR playbook; it’s about aligning with how we actually work today. And oh, does the workplace look different—whether you’re in the office, hybrid, or working from your living room in pajama pants (no judgment).

The Problem with traditional performance management: Relics of the past

Traditional performance management practices are like the office fax machine: outdated, frustrating, and somehow still around. Let’s break down why they don’t work:

1. Annual reviews are irrelevant: By the time an annual review rolls around, most feedback feels like ancient history. You’re telling employees what they should’ve done differently a year ago. Well, thanks for that, but they can’t hop in a time machine and fix it.
2. Recency bias skews everything: Often, managers focus on the last few months of performance (or even weeks) when filling out reviews. Got a huge win early in the year? Too bad. Messed up a project last week? That’s all anyone remembers. Not exactly a fair assessment.
3. Tools like bell curves and 9-box grids are relics: These were designed to stack rank employees, but nowadays, no one wants to feel like they’re on “The Hunger Games” of corporate rankings. Bell curves push managers to fit people into neat performance categories, which doesn’t account for individual strengths and contributions.

There’s plenty of research that shows these methods don’t just feel bad—they’re actually bad for business. Employees subjected to rigid, backward-looking performance processes are more likely to disengage, become cynical, and eventually… leave. Cue the endless hiring cycle.

Moving to performance development: The future Is growth

So, what’s the alternative? Enter performance development—a more forward-thinking, human-centered approach that focuses on continuous growth rather than a one-time judgment of past performance. This method encourages real-time feedback, coaching, and setting employees up for success down the road, not just checking off past accomplishments like you’re filling out a tax form.

Some companies are leading the charge. 

Take Adobe, which replaced annual reviews with a “Check-in” system. This emphasises ongoing conversations between managers and employees, focused on career development, goals, and yes—feedback that actually helps people improve, not just dwell on past mistakes.

Microsoft is another great example. They transitioned to a “growth mindset” culture where employees are encouraged to continuously learn and develop. Rather than punishing failure, they reward effort and innovation, ensuring their people are set up for success in the future.

Adapting to different work environments: Office, Hybrid, Remote

Now, performance management isn’t one-size-fits-all—especially when your workforce could be scattered across multiple environments.

• In-office: You can still get away with spontaneous feedback (think: hallway conversations or impromptu desk visits). However, there’s also a risk of micromanagement. Managers should focus on building structured yet flexible development conversations—so it’s not just “feedback on the fly.”
• Hybrid: Managing performance in hybrid setups requires tech-savvy tools that allow for consistent, transparent communication. Managers need to trust their employees to deliver results on flexible schedules. It’s all about finding that sweet spot between oversight and independence.
• Fully remote: Out of sight, but not out of mind. Remote performance development thrives when managers use tools like virtual check-ins, online performance dashboards, and project tracking to maintain visibility. The key is to over-communicate expectations while fostering an environment of trust and autonomy. Plus, the occasional virtual happy hour doesn’t hurt.

Performance management by company size and industry

Performance management doesn’t look the same for a 50-person startup as it does for a Fortune 500 behemoth. Nor is it the same across industries.

• Startups and SMEs: These smaller, scrappier companies need agile feedback mechanisms that are flexible and fit with their faster and more uncertain pace and environment. A rigid performance review system just won’t fly when your team is wearing 20 different hats.
• Large corporations: The challenge here is balancing standardisation with personalisation. Large companies need structure, but not at the expense of employee engagement. Creating an individual framework for every one of the thousands of employees is not realistic, but then again super imposing the same set of 10 to 15 competencies on every employee regardless of job, department, and nature for work is just as if not more unrealistic. Creating scalable feedback processes that still feel personal is key.
• Tech industry: Tech moves fast, and so should performance development. Quick feedback loops, real-time coaching, and innovation-focused metrics are crucial for keeping up with the pace of the industry.
• White-collar industries: These typically knowledge-based jobs need performance management systems that align with long-term growth and intellectual development rather than just short-term outputs.
• Blue-collar industries: In more operational roles, there’s often a clear set of performance KPIs. But that doesn’t mean development isn’t important. Upskilling and career progression can (and should) be built into performance systems here as well.

Aligning performance development with company culture

Here’s where many companies miss the mark: performance development should be directly tied to the values and culture of the organisation. If your company preaches innovation and creativity, but your performance metrics only measure productivity and output, you’re going to have a serious values mismatch on your hands.

The framework for aligning performance management with culture isn’t rocket science:

1. Define clear expectations based on your company’s values.
2. Ensure feedback is tied to how well employees contribute to the company’s mission.
3. Build a culture of learning, where mistakes are seen as opportunities for growth, not punishable offenses.

Leadership development: Training managers to manage people

Here’s a not-so-secret secret: Managing people is hard. And most managers, frankly, aren’t trained to do it well. They’re often promoted for their technical expertise, not for their ability to manage human beings with all their complexities and quirks.

To make performance development successful, companies need to invest in leadership development. That means training managers in the art of managing people, not just tasks. Managing performance is as much about fostering growth and motivation as it is about hitting targets.

Equip your managers with the right tools—whether that’s training on giving feedback, coaching employees, or creating career development plans. Good leadership is the backbone of successful performance management.

Handling underperformers: Radical candor meets support

Now, let’s talk about the elephant in the room: underperformers. It’s not fun, but it’s part of the job. Here’s the thing: being honest about underperformance doesn’t mean abandoning compassion. You can be radically candid and still be supportive.

• Have tough conversations: Don’t beat around the bush. If someone’s underperforming, they deserve to know—and they deserve the chance to improve.
• Coach them: Once you’ve laid out the problem, provide clear steps for improvement. Guide them. Help them grow. If they succeed, it’s a win-win.
• When to let go: Sometimes, despite the best efforts, it’s clear the fit just isn’t there. In those cases, it’s okay to part ways—but do it with empathy and professionalism.

In the end, the future of performance management is less about what you’ve done and more about where you’re going. It’s about growth, development, and fostering an environment where people can truly thrive—not just survive through the next annual review.

So, let’s leave the bell curves and 9-box grids in the past where they belong. The future is all about forward-thinking, people-centric performance development.

Oh, and if you’re still using a fax machine… maybe it’s time to rethink that too.