The Performance Review Is Dead. What Comes Next?

Let’s start with an uncomfortable truth. Only 2% of chief human resource officers believe their performance management system actually works. This finding from Deloitte's 2025 research isn't just an indictment; it's a declaration of failure. For decades, we’ve tried to iterate on a fundamentally broken model. We’ve moved from annual to semi-annual, added 360-degree feedback, and debated five-point scales versus three. None of it has worked.

The problem isn't the frequency or the format. The problem is that we have fundamentally misunderstood what drives human performance.

The Trust Catastrophe

The process isn't just ineffective; it’s actively harmful. The same Deloitte research reveals a massive crisis of legitimacy. 61% of managers and 72% of workers cannot trust their organization's performance management process at all. Think about that. The very tool designed to build alignment and foster growth is instead sowing distrust at a systemic level.

When 95% of HR leaders express dissatisfaction with traditional appraisals, as other studies show, it's clear the issue transcends methodology. You don't have a process problem. You have a trust problem.

The Cross-Functional Blindspot

Here’s where most organizations miss the plot. Your company's most important work happens in the spaces between teams. Product, engineering, and marketing collaborate to launch features. Sales and customer success work together to retain clients. Value is created through connection.

Yet, traditional performance reviews are built for an industrial-era assembly line. They evaluate individuals in silos. They force-rank people who work on collaborative, interdependent teams, creating internal competition where you need psychological safety. Your performance system is actively working against your operating model.

A New Way Forward: Surge's Connected Performance Architecture

It’s time to stop trying to 'fix' reviews and adopt a new framework altogether. Deloitte calls this 'performance engineering.' At Surge People Partners, we call it our Connected Performance Architecture. This isn't a single event; it's a continuous system built on three pillars:

1. Shared Goals: Align teams around clear, cross-functional objectives (like OKRs). Success is defined as a collective outcome, not a checklist of individual tasks.
2. Continuous Connection: Replace the annual review with lightweight, frequent check-ins focused on removing blockers and providing real-time coaching. The manager's role shifts from judge to performance coach.
3. Growth Pathways: Decouple compensation conversations from development conversations. Use performance discussions to build clear, forward-looking growth plans that align individual aspirations with company needs.

> At Surge People Partners, we believe performance isn't managed, it's engineered. It's an output of your entire system, not a single, broken process.

Measuring What Matters: A New ROI for Performance

For too long, the assumed ROI of performance reviews was 'improved productivity'—a metric as vague as it is difficult to measure. A 2026 trend analysis shows that high-performing companies are changing the scorecard. They measure the success of their performance system against concrete business outcomes:

• Employee Retention: Does our process make our best people want to stay?
• Team Resilience: Does our feedback system help teams navigate challenges and adapt faster?
• Engagement & Follow-through: Do people act on their development plans? (Source: Protenintl)

This shift demands concrete evidence over HR orthodoxy. It’s a more rigorous, business-focused approach.

How to Get Started: A Simple Performance Review Framework for Startups

Transitioning to a full Connected Performance Architecture takes time. For startups and smaller tech companies needing a more immediate, simple performance review process, start here. This is a lightweight model focused on impact and collaboration.

The Quarterly Impact Check-in:

• What was your biggest impact on our shared team goals this quarter? (Focuses on collective success)
• Where did you see great cross-functional collaboration happen, and what can we learn from it? (Rewards connection)
• What's one skill you want to develop next quarter, and what support do you need? (Forward-looking growth)
• What's getting in your way, and how can I help? (Manager as coach)

This simple, four-question format moves the conversation from rating past performance to enabling future success. We offer a downloadable performance review template based on this model to help you start.

Conclusion: Stop Managing, Start Engineering

The evidence is overwhelming. The traditional performance review is a failed experiment. Continuing to invest in it is a strategic error. The most progressive companies are making a fundamental shift. They are moving away from managing individual activities and toward engineering the systems that produce collective outcomes. They are building trust, fostering collaboration, and measuring what actually matters. The question is no longer if you should change, but how quickly you can start.

Traditional Reviews vs. Connected Performance

Frequently Asked Questions