The annual performance review is often met with dread by workers and managers alike. Managers steel themselves for uncomfortable conversations; employees brace for judgement. Whether meaningful change follows is often at the mercy of time, capacity and competing priorities.
But according to new research from Macquarie University published in the Journal of Organisational Behaviour, the entire performance feedback system may be built on ideas that don’t actually work.
In the first comprehensive critical review of performance feedback research in almost three decades, a team led by Dr Emma Heine, Deputy Director of the Macquarie University Health at Work Research Centre, examined 173 studies across psychology, economics, management, education, healthcare and sport. What they found surprised even seasoned academics.
“There are more different ways of measuring feedback, and many more labels and definitions given to performance feedback in the literature, than we originally expected,” says Dr Heine. “Combined with a lack of clarity about what type of feedback is being studied, this has led to an unstable foundation on which performance management practices are built.”
More than half of studies in the field do not specify whether the feedback being measured was positive or negative. Across decades of scholarship, there are 75 different labels for feedback – many of them contradictory, overlapping or undefined. In other words, the global evidence base guiding how Australian organisations evaluate performance is highly inconsistent.
Positive feedback outperforms criticism
One pattern was clear. When workplaces recognise what employees are doing well, performance reliably improves. Positive feedback boosts confidence, strengthens motivation and reinforces effective behaviours.
“Positive feedback is more important than many people realise,” says Dr Heine. “When people hear the word ‘feedback’, they often immediately think of critique, which shows how focused we are on the negatives when discussing feedback and performance evaluations.”
Negative feedback – the part of the annual review many employees dread – tells a different story. Popular management wisdom frames hard conversations as catalysts for growth, but the evidence suggests otherwise. Negative feedback only works when there is a strong, trusting, high-quality relationship between the manager and the employee.
“The reciprocal relationship helps both parties when discussing negative feedback,” says Dr Heine. “Trusting your manager has beneficial intentions helps when receiving feedback. Trusting your employee will listen openly and try to improve, rather than become defensive, helps when providing it.”
This helps explain why annual reviews often feel unproductive or emotionally charged. Negative feedback delivered without relational trust can feel demoralising rather than motivating.
The hidden forces shaping what we’re told at work
The research also shows feedback is far from objective. The way employees are evaluated is shaped by:
- Gender stereotypes, with men and women penalised differently after performance changes.
- Emotional responses, including harsher judgement of male employees who show distress during feedback.
- Cultural norms, where managers avoid criticism to sidestep conflict, inflating annual ratings.
- Organisational pressures, where formal reviews trend positive not because performance is high but because the stakes of confrontation feel too great.
These findings paint a more complex and human picture of feedback: less about objective evaluation and more about relationships, emotion and social cues.
Why annual reviews fall short
The traditional annual review compresses an entire year of work into a single structured conversation – a format research suggests is mismatched to how performance actually develops.
“To be effective, feedback should be an ongoing conversation throughout the year and a regular part of the supervisor–subordinate relationship,” says Dr Heine. “Annual reviews, especially when tied to bonuses or promotions, are often too charged to genuinely support development and performance improvement.”
The review also found managers tend to overrate performance during formal evaluations – not because they are generous, but because formal settings elevate the risk of conflict. The result is inflated ratings that do not reflect actual contribution, reducing opportunities for honest improvement.
A new approach to workplace feedback
To address the fragmented evidence base, the research team has developed a new integrative model: Performance Feedback Valence Theory. The framework clarifies why positive and negative feedback operate so differently and identifies the conditions under which each is effective.
For organisations, there are practical applications. Instead of relying on a once-a-year performance conversation, they should shift towards ongoing, specific feedback supported by genuine relationship-building between managers and employees. Positive feedback should be used deliberately to reinforce high performance, while negative feedback should be delivered in environments where trust, fairness and psychological safety are well established.
“Negative feedback should not be avoided when it is warranted,” says Dr Heine. “But to achieve performance improvement, a high-quality relationship is critical. If that relationship is not yet present, factors such as goal setting and the credibility of the manager can help.”
The annual performance review may not be broken, but it is incomplete. With better tools, organisations can do far more to help people succeed.
Dr Emma Heine is the Deputy Director (Early Career Research) at the Health at Work Research Centre, Macquarie University