Times Are Changing: The Future of Performance Management Trends

What does performance management look like now and in the near future?

Given recent shifts in workforce trends over the past couple of years, we can expect to see some changes in the world of performance management throughout 2025.

AI and its effect on performance management

Artificial intelligence (AI) is starting to impact performance management and how we approach it. Employers can use AI to establish a personal learning curriculum that identifies the employees’ learning styles and helps them improve weak areas. It also streamlines the process of performance management, allowing HR staff to focus on working with talent rather than spending too much time extrapolating data from several resources. 

AI helps present information in a way that is easier to absorb, allowing employees to remember it long-term and integrate it into daily tasks effectively. HR employees can also utilize AI to better garner feedback by using historical data to create relevant self-evaluations.  

Performance management in the era of hybrid work

Remote and hybrid work have become much more prevalent since the pandemic. Instead of requiring employees to work a 9-to-5 in the office, many managers have found that giving employees the option to work where and when they feel most productive improves employee performance. Although every business is different, we can expect to see more companies manage employee performance with hybrid work opportunities and flexible scheduling.

When managing performance in the era of hybrid work, we can also expect managers to rely on certain technology and communication channels to facilitate performance and improvement in real time, regardless of where employees are located.

Data-driven performance management with real-time tracking

As many business processes shift to cloud-based applications and automation, it makes sense that managers integrate top cloud-based HR software with real-time tracking into their performance management process. The best employee monitoring software can provide managers with real-time employee performance metrics and permit managers and employees to provide performance feedback in real time. Employee performance data is ideal for tracking and improving employee performance over time.

Understanding the importance of employee health and well-being

Employers are beginning to see the importance of creating a workplace that prioritizes employee health and well-being. Employees tend to be more productive and perform better when they are happy and healthy. This includes physical and mental health.

We expect to see more employers factor in employee fitness and wellness when managing employee performance. For example, if a manager notices that an employee is becoming burned out, they might advise them to take a day off to relax and recharge, thus increasing their performance in the long run.

Using professional learning and development to drive performance

Employees care about their performance and they want to learn and grow. As more employers realize this, we can expect them to dedicate more time and resources to employee learning, development and career pathing. When you give your employees opportunities to learn and develop their skills, they will become better workers within your organization. The result is better performance.

Offering professional development opportunities isn’t just good for employee performance, it can also help you retain employees. Work Institute consistently finds that lack of career development is a top reason employees quit their jobs.

More scrutiny on gender bias in performance management

Research shows that gender bias influences evaluations. As companies work toward creating diverse, equitable and inclusive environments, they can’t ignore how these biases play into performance management.

We expect an increased emphasis on ensuring performance reviews are free from bias in the future. One way to tackle gender bias is to provide training for managers on best practices when they are writing their performance reviews and how to ensure they take a fair and equitable approach.

How has performance management recently changed?

To get a better understanding of where performance management is heading, let’s take a quick look at how performance management has changed over the years. These management trends are commonly found among successful organizations.

Removing performance ratings

Many thriving organizations have dropped performance ratings. Performance ratings can lower employee motivation and negatively impact performance as a result. According to Gallup, just 14 percent of employees believe that reviews helped them improve performance.  Forward-thinking companies favor well-structured objectives and regular feedback over outdated grading systems.

Conducting frequent check-in meetings

Does your company still rely on the annual performance review to evaluate an employee’s entire year of work? If you said yes, you might want to reconsider. Companies are recognizing that once-a-year meetings are inefficient and insufficient for evaluating employee performance properly.

Instead, many companies have introduced “check-ins” – regular meetings or conversations between managers and individual employees. These check-ins allow managers to identify issues early on, support employees over time and encourage progress. They are also a great way for employees and managers to build rapport with each other and become more comfortable discussing performance goals, achievements and pain points.

Giving informal feedback

As mentioned, feedback has traditionally been stored up and kept on file all year, waiting until the annual performance review when managers let it loose all at once. This can be a problem for many reasons. For example, the manager might only mention the employee’s most recent performance, ignoring their accomplishments or setbacks earlier in the year. The manager might also bring up old performance topics that have since spiraled as a result of not being addressed at the moment or they might try to discuss an issue neither the manager nor the employee can fully recall.

Instead of saving up feedback, managers and co-workers should be encouraged to provide informal feedback as soon as an event occurs, whether it’s positive or negative. This way employees are praised when appropriate and coached when a challenge presents itself.

Using shorter-term objectives

In line with the abandonment of performance ratings, companies are setting more regular objectives with shorter time frames. Yearly goals and meetings are rapidly being replaced with regular informal check-ins and shorter-term objectives. Performance is being constantly monitored, as opposed to analyzed just once a year.

What is performance management?

To comprehend the future and past of performance management fully, it is critical to fully understand what the process is. Performance management is the process of tracking and evaluating your employees’ work. Creating a good performance management process involves outlining employee goals and measuring an employee’s progress toward those goals. Employees and managers work together to ensure their goals and performance are continually meeting the needs of the organization. If an employee struggles with poor performance, they can work with their manager to get back on track with a performance improvement plan.

Kimberlee Leonard contributed to this article.