3 Reasons Performance Appraisals Fail
- Mark Shaw
- May 4
- 3 min read
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Kevin R Murphy from the University of Colorado wrote a wonderful article in 2025 titled “The Illusion of Performance Management” and has now followed that up with an excellent presentation titled “3 Reasons Why Performance Reviews Fail”.
In his presentation, Kevin admits that after 40 years of studying performance measurement/appraisal/management he moved from optimism, to guarded scientism, to complete despair about evaluation and performance appraisal/management.
His research has identified 3 core reasons for his despair.
1. Performance appraisals/discussion do not measure performance
2. Performance feedback is not appreciated by the receiver and
3. Organisations do not use the data generated by the process.
His conclusion is that performance evaluation does not work the way we think it does. His 40 years of research proves the reasons are so solid that they will not be solved by having a different form, more narrative, or less narrative. Especially now that the narrative is likely to be at least partly “AI-generated slop”.
He says we should accept that the current approach has severe limitations and that we should think about how we can use performance appraisal/management to do the least harm, and to help those few employees where it can do some good.
As some readers may know, this aligns with my 30 years’ experience developed through my career as a HR Professional and more recently HR Consultant.
While Kevin and I have spent a combined 70 years looking at the same problem through totally different lenses, we have arrived at the same solution that has been validated by cross referencing our experiences. The academic evidence matches the real-world results. The proven and repeatable real world outcomes achieved match the meta study findings.
As Kevin summarises in his presentation, performance evaluation does not work the way we think it does, and we should accept that performance appraisal/management has severe limitations. Also, that we need tools that do the least harm while helping those few employees where it can do some good.
I completely agree with Kevin’s arguments and findings and can summarise our independently developed re-imagined approach to performance appraisal/management as follows.
Separate employees into one of three groups before undertaking performance measurement/appraisal/management and use a different approach and process for each group.
Work Group | Why | New Approach |
Consistently poor performers or 2%-ers | To demonstrate robust management with aim of improvement. Termination is a last resort | Use PRPs not PIPs |
Acceptable/ good representing 80% of your workforce | Do not harm | Keep the process as simple as possible and based on development |
Stars | Keep out of the way/ run interference | Avoid formal appraisals at all costs. |
In 2105, my good friend and colleague Di Armbrust and I outlined how to make this approach work. It’s published in our book “The 2% Effect”. Kevin has confirmed the academic literature and research support this approach.
You can review Kevin’s full presentation at Three Reasons why Performance Appraisals Fail.
To summarise, the evidence is in and has been tested both academically and in the real world. Traditional thinking, approaches, and processes to performance measurement/appraisal/management will continue to fail and cannot be saved by having a different form, changing the narrative, or streamlining KPIs.
The proven alternative is to follow the model outlined above with the understanding that the WHY is more important that the HOW when it comes to performance measurement/appraisal/management.
Do you want to change your performance appraisal form, introduce more forced informal discussions, use short cycle OKR’s (Objectives & Key Results) under a SMART model, or are you ready to overcome the real problems and make your system work?
As always, the choice is yours.