This is the first in a series of blog posts on the evolution of performance management. Over the past year, we’ve spoken with 100+ People and Tech leaders from growing European tech companies to understand what drives (and hinders) employee growth and performance.

What is Performance Management & why we studied it

Performance management has traditionally focused on measuring and evaluating employees past performance. Annual or semi-annual reviews assess contributions, set goals, and determine compensation.

But as companies grow and workplaces evolve, ensuring employees feel supported, motivated, and aligned with company goals becomes more complex.

To understand how performance management works in modern teams, we spoke with several People and Tech leaders from European tech companies. They shared insights on their current practices and philosophies.

Combining insights from recent business research with our own interviews, this blog post highlights key lessons and practical steps for building a performance enablement system that addresses common challenges.

The challenges of traditional Performance Management

Many leaders shared similar frustrations with traditional performance management systems. Here are some of the biggest challenges we uncovered:

1. Time-consuming & bureaucratic: Traditional reviews require heavy admin work, frustrating employees and slowing down both HR and business operations.
2. Fails to drive performance: Traditional performance management systems, like annual reviews and forced rankings, can be counterproductive. Instead of improving performance, they create stress, reduce engagement, and focus on past mistakes rather than future growth.
3. Performance vs. development conflict: Employees often perceive feedback as being tied only to promotions or compensation, rather than as a tool for personal and professional growth.
4. Delayed Feedback: Annual or semi-annual reviews often mean that feedback arrives too late to be useful. Employees are left without timely insights that could help them improve in real time.
5. Biased Feedback: Performance reviews often suffer from recency and positivity bias. People prioritize recent events and give overly positive feedback when it impacts colleagues' evaluations, often neglecting constructive input.
6. Manager-driven, not employee-centric: Traditional models place the burden of performance evaluation on managers rather than empowering employees to take charge of their own growth. This strains managers' time while limiting individual development.
7. One-size-fits-all approach: Many organizations use rigid evaluation systems that fail to account for individual career paths, team dynamics, and evolving business priorities.

Business academics have recognized the problems of traditional performance management as well. A Deloitte study from 2014 found that 58% of HR executives considered performance reviews an ineffective use of supervisors’ time.

Business Research Quarterly (2021) adds that COVID-19 pandemic exposed how many organizations rely on outdated performance appraisal systems: annual reviews with minimal feedback, poor alignment with strategic goals, and HR-driven processes that ignore real-time coaching and improvement.

Moving from Performance Management towards modern Performance Enablement

Performance management is evolving into something more continuous, employee-driven, and dynamic; what we call Performance Enablement. This shift seems to be especially crucial for growing tech organizations that operate at a fast pace and require a model that fits their operational cadence.

Traditional performance management focuses on evaluating past performance, whereas performance enablement is about making continuous growth possible by leveraging real-time, actionable feedback.

Performance Enablement ensures fair reviews, but also provides individuals with meaningful feedback that supports their development and growth every week, instead of on a bi-annual basis.

Many organizations we’ve spoken to are in the process of transitioning to performance enablement, or already running both performance management and enablement in parallel.

Business science seems to support this shift as well, as Harvard Business Review noted that 70% of multinational companies are moving toward a performance model that focuses on people development, not evaluations.

Our interviews show that growing companies introduce basic performance processes around 100-200 employees, while established organizations develop sophisticated systems for hundreds or thousands.

A common challenge they face is the lack of tools and frameworks to support this shift, along with distinguishing between constructive feedback and evaluations.

Elements of Performance Enablement (that seem to work)

From our discussions, we identified six key elements of an effective performance enablement process. Here’s a quick overview of each element - all of which we’re looking to cover in detail in future writing:

1. Set clear expectations

• Why it matters: People need to know what good performance looks like.
• How to do it: Define key behaviors, skills, and impact metrics for each role. Use simple templates for consistency.
• Outcome: Clarity and alignment between individual contributions and company goals.
• Suggested cadence: Onboarding, role changes, quarterly

2. Build a culture of continuous feedback

• Why it matters: Timely feedback helps employees grow in real time.
• How to do it: Tie feedback to key milestones (onboarding, project completion, meetings). Train teams to give meaningful, timely feedback.
• Outcome: Eliminates bottlenecks caused by delayed reviews.
• Suggested cadence: Ongoing

3. Have regular 1:1 check-ins

• Why it matters: Employees need structured support and alignment.
• How to do it: Keep 1:1s employee-driven, focusing on priorities, feedback, and growth. Use templates to track discussions.
• Outcome: Builds trust and keeps everyone aligned.
• Suggested cadence: Weekly or biweekly

4. Prioritize career growth discussions

• Why it matters: People stay when they see a future in the company.
• How to do it: Replace one regular 1:1 with a quarterly career conversation. Use accumulated feedback to guide discussions.
• Outcome: Helps employees plan long-term growth and stay engaged.
• Suggested cadence: Quarterly from start date

5. Evaluate performance continuously

• Why it matters: Ongoing assessments reduce bias and improve decision-making.
• How to do it: Blend qualitative feedback with structured evaluations. Use consistent prompts to measure skills, behaviors, and impact.
• Outcome: Informed talent decisions and fewer surprises.
• Suggested cadence: Quarterly

6. Separate compensation from feedback

• Why it matters: Employees should feel safe receiving feedback without worrying about pay decisions.
• How to do it: Keep compensation reviews separate from performance conversations. Use structured data for fair decisions.
• Outcome: Greater trust in the system and fairer rewards.
• Suggested cadence: Annual

What’s next?

We’ll be writing deep dives into each of these topics, sharing practical steps on how to implement them in your team. Stay tuned for more insights on enabling real, continuous growth in your organization. In the meanwhile, join the conversation:

• Follow us on LinkedIn for more insights and our future writing.
• Join the Taito.ai Beta waitlist and be the first to receive our updates and learn about our AI-powered performance enablement tools.
• Reach out to us at noora@taito.ai to have a discussion about the topics above.

Sources

• Taito.ai interviews with 100 People- and Technology leaders in European tech companies (2024)
• Talent management challenges during COVID-19 and beyond: Performance management to the rescue, Business Research Quarterly (2021), link
• The Performance Management Revolution: The focus is shifting from accountability to learning, Harvard Business Review (2016), link
• Performance management is broken: Replace "rank and yank" with coaching and development, Deloitte (2014), link