Stop treating performance reviews like a tax return

Performance reviews are the only business process we happily run on memory.

Nobody prepares a BAS by guessing what happened last October. Nobody runs payroll on a feeling. Yet every June, managers sit in a room trying to recall twelve months of someone’s work, then call it a performance review.

And they cram it in before 30 June, because EOFY.

There’s no rule that says reviews are due at the end of the financial year. Not in the Fair Work Act, not in a Modern Award, nowhere. It’s a deadline you invented, and it’s costing you more than you think.

Are performance reviews meant to happen at EOFY?

No. The end of the financial year is an accounting deadline, not a people one.

Reviews can happen in July, in September, on someone’s work anniversary, quarterly, or monthly. When you have the conversation matters far less than whether you’re having the right one at all.

What EOFY does is turn the review into another compliance task. A form gets dusted off. A manager spends twenty minutes trying to recall what happened ten months ago. Everyone signs. Nobody changes. The annual ritual most businesses run is admin wearing an HR badge.

You’re not reviewing performance. You’re reviewing memory.

Most owners think an annual review measures twelve months of work. It doesn’t. It measures whatever they can remember, and that’s mostly the last six weeks.

Can you recall how someone performed last August? The client mess they quietly sorted in February? Neither can the manager filling in the form. So the recent stuff takes over. One rough month wipes out eleven good ones. One recent win glosses over a year of coasting.

That’s not a review. It’s a guess with a signature on it.

Good businesses don’t manage performance once a year

They manage it every Tuesday.

Performance should never be a surprise. If someone only finds out they’re underperforming at their annual review, that’s your failure, not theirs. And if your best person only hears they’re valued once a year, don’t be shocked when a competitor who says it every week takes them off your hands.

An annual review isn’t where leadership happens. It’s where leadership gets audited. It should round up the conversations you’ve already been having all year, not start them.

Should you link a pay rise to a performance review?

This is where reviews come off the rails.

The employee walks in thinking about money. The manager spends the meeting explaining why the rise isn’t bigger. Within five minutes it’s a salary negotiation wearing a feedback hat.

Keep them apart. Performance is about behaviour, contribution and growth. Pay is about market rates, budgets and the value of the role. They’re related, but they are not the same conversation. Run them together and your people stop hearing the feedback. They’re just waiting for the number.

You can still do both. Just not in the same breath, and not on autopilot where every review automatically triggers a pay chat.

What happens if you say someone’s doing great when they’re not?

This is the mistake that costs you later.

The awkward chat is harder than ticking “meets expectations”, so business owners and leaders fudge it. Something positive goes on the form, everyone leaves happy, and twelve months on they’re calling us asking how to performance manage the same person. The trouble is their own paperwork says that person has been doing a great job. They’ve spent a year building the employee’s defence.

Your reviews are records, and records are evidence. You can’t lean on one bad review to justify a dismissal. You need a documented pattern showing the person knew there was a problem and had a fair chance to fix it. A file full of glowing reviews destroys that.

The Commission also wants concerns to be specific and raised at the time, not invented once the relationship has already broken down. In Goonewardena v Komeyui Management Pty Ltd [2024] FWC 1445, the dismissal was found unfair partly because the employer’s performance concerns weren’t specific enough and weren’t backed by evidence when it counted. “Needs to improve communication” is not a warning. It’s a vibe. Specific examples are what hold up.

Being kind on the day can get very expensive. Honesty, handled professionally, is the kinder option every time.

Your best people need the review more than your worst ones

Most owners get this backwards. They spend review season on the people causing headaches and give the ones quietly carrying the business fifteen minutes and a “keep up the good work”.

Performance reviews aren’t for fixing people. They’re for keeping them.

Your best employee isn’t sitting there wondering whether they’re underperforming. They’re wondering whether anyone notices. And the competitor trying to poach them notices every week.

High performers rarely leave over one bad review. They leave because nobody saw them for months. The review is your one structured chance a year to tell them, to their face, why they matter. Don’t waste it on the squeaky wheels.

The No-Surprise Rule

Here’s the whole thing in one easy rule. A good review contains nothing that surprises either person in the room.

Before you write anything down, ask yourself three questions:

• Have I already had this conversation?
• Can I give three specific examples?
• Would this still make sense to someone reading it in twelve months?

If the answer to any of them is no, don’t write it. Go and have the conversation first.

If you need twelve months of paperwork to tell someone they’re struggling, you’ve waited eleven months too long. A review that surprises someone isn’t feedback. It’s a confession that you left too late.

So what should you do instead?

Forget the calendar and build a rhythm.

• Have short, regular conversations through the year.
• Recognise good work while it’s still fresh.
• Deal with problems while they’re small.
• Keep pay and development in separate conversations.
• Document concerns honestly and specifically, not just when it suits you.

Do that and the annual review becomes what it should be. A summary, not a surprise. Not a negotiation and not a frantic reconstruction of the last twelve months. Just the natural end point of a year of actually leading.

The HR Gurus take

The biggest mistake isn’t skipping performance reviews. It’s believing one meeting can stand in for twelve months of leadership.

Your accountant runs on EOFY. Your people run on whether you noticed them all year.

Frequently Asked Questions

Got a review you’ve been putting off because you know it’s going to be awkward? Don’t wait until next June. That’s usually the point where a coaching conversation turns into a legal one. We help SME owners have those conversations properly, before Fair Work gets involved. Talk to the HR Gurus team.