Performance reviews are essential for understanding employee progress and delivering targeted, actionable feedback.
Yet, many organizations agree that the process is broken. According to Mercer’s Talent Management survey, 60% of HR leaders say performance management doesn’t work as it should.
Bias, inconsistent data, and administrative burden all undermine performance reviews and performance management. However, AI offers a new path forward.
By delivering real-time insights, providing consistent data, and making it easier to write evidence-based performance reviews at scale, AI can help transform reviews into a more accurate, actionable, and continuous process.
In this blog post, we explore the role of AI in performance management, what an AI-powered performance review process looks like, and how AI improves performance reviews for managers.
Let’s dive in.
Key Takeaways
- AI in performance management involves using AI to enhance goal-setting, feedback delivery, and employee development so managers can help employees do their jobs more effectively, continuously grow, and achieve organizational objectives.
- An AI performance review process leverages AI across stages of the performance review cycle, from preparation to performance recognition.
- AI tools help managers prepare for and write performance reviews by consolidating performance data, flagging bias, and providing feedback on written evaluations.
- Hone’s AI Coach helps managers craft thoughtful, evidence-based performance reviews and practice performance conversations before they happen in real life, empowering them to deliver actionable, fair feedback to direct reports that elevates performance.
What Is AI in Performance Management?
AI in performance management is using AI-powered tools to enhance and streamline goal-setting, progress monitoring, feedback delivery, and employee development. This helps managers empower employees to do their jobs more effectively so that organizations can achieve their objectives.
Leaders can take advantage of various AI tools to improve employee performance and drive organizational success, including:
- AI coaches like Hone AI
- AI performance review writing assistants like Lattice
- AI notetakers like Otter.AI
- AI analytics tools like Pando
To understand the importance of AI in performance management, Ken Carroll, Hone’s Senior Director of Customer Success, says it’s helpful to look at performance management as a “culture.” One where feedback is consistently provided, and employee performance is consistently measured.
“I think one of the hardest challenges for HR teams is to create a culture that helps people know how they’re performing and creates the clarity to know how to measure performance,” said Carroll.
This means AI’s purpose in performance management is, ultimately, to foster a culture of transparency, accountability, and continuous growth by helping managers accurately measure employee performance over time and deliver consistent, data-driven feedback.
What Is the Role of AI in Performance Reviews?
Before exploring the role of AI in performance reviews, let’s consider the traditional performance review cycle.
According to Betterworks, this cycle can be broken into seven stages:
- Preparation
- Employee self-assessment
- Manager assessment
- Performance review meeting
- Feedback and development
- Ongoing performance support
- Performance recognition and rewards (e.g., raises, bonuses, etc.)
It’s easy for flaws to emerge throughout this year-long process. For instance, data fragmentation during the preparation stage and bias during the manager assessment stage.
According to Rea Rotholz, Hone’s Senior Director of Learning Solutions, the latter issue is one of the most pervasive challenges in the performance review cycle.
“Performance reviews, the way they’re usually run, are riddled with biases,” Rotholz said. “It can show up through recency bias or managers who have closer relationships with certain employees, maybe because they’re in an office together.”
The role of AI in performance reviews, then, is to improve and optimize the traditional performance review process through bias detection, automation, data consolidation, and insight generation.
The result? An efficient and equitable AI performance review process.
Here’s a breakdown of what this AI-enhanced review process might look like for a senior editor named Brandon and his staff writer, Khadijah:
| Performance Review Cycle Stage | How AI Supports Each Stage |
| Preparation | To prepare for a performance review with Khadijah, Brandon uses an AI analytics tool to pull Khadijah’s assignment history from Asana and suggested feedback from Google Docs. The AI tool’s real-time data and insights show that Khadijah receives minimal article revisions but lags behind her colleagues in completing assignments quickly. |
| Employee Self-Assessment | Khadijah assesses her performance. She uses an AI writing assistant to improve her self-evaluation by removing hedging language and providing specific examples. |
| Manager Assessment | Brandon uses an AI coach to get live, step-by-step feedback on how to write an effective evaluation that identifies Khadijah’s high-quality articles as a strength and her inefficiency as an area of improvement. |
| Performance Review Meeting | Ahead of the performance meeting, Brandon practices with an AI coach on how to use the SBIW framework to deliver actionable, evidence-based feedback to Khadijah.
The AI coach flags Brandon’s tone for being overly critical, which he works on. |
| Feedback and Development | After the performance review meeting, Brandon and Khadijah agree on goals to improve her efficiency. Brandon uses an AI writing assistant to draft a personalized development plan with quarterly milestones. |
| Ongoing Performance Support | Brandon leverages AI-powered features in Asana to track Khadijah’s progress toward goals and send automatic reminders about upcoming check-in meetings. |
| Performance Recognition and Rewards | Performance data from Asana shows that Khadijah has improved her task completion rate for writing assignments by 20%, contributing toward the company’s overall goal of increasing article production. Brandon rewards Khadijah with a raise. |
How AI Improves Performance Reviews: 4 Key Benefits
Now that we’ve discussed the flaws inherent in the traditional performance review cycle, let’s look more closely at the advantages offered by an AI-powered performance review process.
1) Promotes Fairness and Equity
Betterworks’ 2023 State of Performance Enablement survey found that less than one-third of employees see performance reviews as fair and equitable.
This is concerning as unfair performance reviews “can completely erode trust in the organization” and hurt retention, according to Rotholz.
Fortunately, AI supports fair and consistent evaluations in two ways.
First, by consistently tracking performance data—like the number of tasks completed—and comparing employee performance against company benchmarks.
And second, by helping managers avoid favoritism by prompting managers to take a data-driven approach to evaluations to ensure reviews are about objective performance, not personal preference.
2) Automates Administrative Tasks
AI streamlines administrative tasks, which managers spend 40 percent of their time on, according to data from Deloitte. For example, managers can use AI tools to:
- Summarize trends from employee check-ins to pinpoint strengths and weaknesses
- Draft and organize performance feedback
- Collect and analyze performance data like efficiency and quality of work
This frees managers up to have richer, more meaningful performance-related conversations that empower employees to grow and perform at their best.
3) Offers Continuous Feedback
AI coaches like Hone’s AI Coach provide real-time, personalized feedback so managers can strengthen their performance reviews before the actual meeting.
For instance, instead of a manager sharing vague feedback that a direct report “could work on their communication skills,” a manager could learn and practice the SBIW framework for giving feedback with an AI coach and gain insights that help them improve their feedback before they share it in real life.
By learning how to apply the framework with help from AI, the manager is empowered to show up with confidence and share specific feedback with their direct report that opens up the conversation to find a way forward.
4) Delivers Data-Driven Insights
Using insights from AI analytics, managers can deliver more personalized feedback, like identifying strengths and recommending projects that allow employees to showcase those strengths.
Beyond providing insight into individual performance, AI analytics also help managers understand and improve team performance by surfacing data on employee engagement and goal achievement.
“[AI insights] can become an operating system of letting the team know what’s important, what’s working, and where it’s having impact,” said Ken Carroll.
How to Use AI to Prepare For Performance Reviews
As we touched on before, preparation is a major part of performance reviews. Here’s how you can use AI to expedite and enhance this particular stage of the performance review process.
1) Gain Insight Into Effective Performance Review Protocol
By offering insight into performance review best practices, frameworks, and behavioral cues, AI coaches help managers understand what an effective review entails.
Rea Rotholz frames the benefits this way.
“If you have an entire organization or all of your managers sharing the same frameworks, and the same way of thinking about a performance review, you’re going to have more consistency in how they’re being deployed across the organization,” she said.
2) Collect and Consolidate Performance Data
AI allows managers to have more productive performance review conversations by collecting and analyzing data from diverse sources—from customer satisfaction surveys to Slack recognition messages. With this consolidated data, managers can enter review meetings prepared to discuss strengths and areas of improvement.
3) Practice Review Conversations
AI coaches like Hone help managers practice review conversations before they happen in real-life, giving managers endless opportunities to practice their delivery and conversation structure in a safe, judgment-free space.
Carroll adds that practicing with AI coaches eases meeting anxiety. “There’s some anxiety that comes with giving someone important feedback. [AI] can provide a methodology that takes away some of the fear.”
How Can AI Help Managers Write Better Performance Reviews?
A written evaluation is another critical component of the performance review process. Here are three ways AI assists managers with this step.
1) Improve Format and Structure
Generative AI tools can suggest templates to format your written review. You can also turn to an AI coach to organize your talking points in real time.
Rotholz explains how Hone’s AI Coach does the latter.
“[Hone AI] will literally be like, ‘Okay, the first thing you need to think about is this, write it down. Okay. How did that go? Do you have any questions?’ It’s walking you through each step.”
2) Refine Tone and Language
Having trouble striking the right tone? AI tools can flag emotionally-charged language to keep your review warm and professional.
For instance, Hone AI helps you avoid biased language and focus on evidence-based feedback that clearly highlights wins, pinpoints opportunities, and sets next steps.
At the same time, writing assistants like Grammarly can help you word your evaluation more impactfully by removing critical or hedging language.
3) Flag Bias
Bias can surface in written reviews when managers focus on an employee’s latest achievements rather than their overall performance.
Luckily, AI coaches with built-in bias detection can rein in recency bias. For instance, Hone AI prompts managers to reflect on an employee’s performance across the past year, not just the past few months, for a more accurate, comprehensive review that recognizes an employee’s year-long contributions.
How to Implement AI for Performance Reviews
The nuanced nature of performance reviews means HR and L&D leaders should prioritize strategic implementation over swift adoption.
With that in mind, here are five steps HR and L&D leaders can follow to ensure incorporating AI into performance reviews is effective and ethical.
- Identify performance review goals: Do you want to make the review process more efficient? Improve manager feedback? Mitigate bias? Clarify your goals to select the right AI tools.
- Find the right tools: HR and L&D leaders have countless AI tools at their disposal—from writing assistants to AI coaches. Choose one that aligns with your needs and budget.
- Audit AI systems for bias and data privacy: Audit AI systems at least annually to curb bias and ensure compliance with data protection regulations and guidelines like SOC 2.
- Provide training and monitor results: Train managers on how to use AI tools, interpret analytics, and apply insights. Evaluate the effectiveness of AI by monitoring key performance review metrics like objective management and work efficiency.
- Maintain human oversight: Humans should assess AI’s outputs for bias or inaccuracies. While AI can streamline the performance review process, decisions should be left to managers, not machines.
Build Better Performance Management Cycles With AI
AI provides more than a quick fix to a broken, outdated performance review system. It helps build better performance management cycles by reducing administrative burden, delivering data-driven insights, and providing continuous feedback that helps managers and individual contributors continuously improve.
By using AI in performance management, managers can prepare for and practice review conversations in advance. They can also write more detailed and equitable evaluations so employees know exactly where and how to improve.
Of course, incorporating AI into your performance review process might feel daunting. But the right vendor will make implementation seamless. Luckily, Hone offers a free trial so you can explore how we use AI to enhance performance management and drive success at your organization. Start your free, two-week trial today to access Hone AI and our expert-led live classes.
FAQs
How can I safely use AI in performance management?
You can safely use AI in performance management by maintaining human oversight, implementing strong data privacy and security measures, training employees on how to use AI responsibly, and regularly auditing AI systems for compliance with data protection laws.
What are AI performance management tools?
AI performance management tools are AI tools that help managers automate tasks, collect and analyze performance data, enhance performance reviews, and improve employee development and engagement. Hone, an AI coach for HR and L&D teams, is one example.
