Performance reviews are the backbone of employee development, yet they're often met with groans and eye rolls.
We don’t need to tell you why: the traditional approach can be time consuming, uncomfortable, and demoralizing. That’s where artificial intelligence (AI) is coming in. It can make performance conversations more data-driven, objective, and — if you can believe it — a little bit exciting.
It’s no secret that AI is quickly becoming a staple in performance management systems. A recent survey from the Society for Human Resources Management (SHRM) found that 57% of HR professionals already use it to provide more comprehensive feedback and facilitate employee goal setting.
AI promises to uncover hidden insights, reduce bias, and streamline performance conversations for all parties, which is great. But before we get carried away with the hype, there are some questions to ask, like: How do we ensure that AI doesn't dehumanize the process? After all, performance reviews are ultimately about people —their growth, challenges, personalities, and potential.
Here, we'll show you how to find that sweet spot where AI's capabilities enhance, not overshadow, the human touch. We'll discuss the benefits, address the risks, and offer practical tips for integrating AI in a way that empowers both managers and employees — and keeps the heart and soul of performance conversations intact.
McKinsey research suggests that AI will vastly improve individual and workforce productivity and may automate up to 30% of business activities across occupations by 2030.
For instance, when prepping for performance reviews, AI can revolutionize how you gather data, offer feedback, and identify growth opportunities for your employees. Because of its ability to sift through mountains of information — like emails, project timelines, and peer feedback — AI can spot trends that might escape your human eye.
Source: Zensai
Did a team member consistently exceed sales targets? Has their coding efficiency improved over time? AI helps managers mine these gold nuggets, thus freeing them to focus on high-value human interactions and master the art of performance conversations.
Performance conversations should be based on more than metrics and serve as opportunities to motivate and connect with your direct reports.
This is yet another reason why it’s so important to maintain a personal touch during performance reviews.
While AI can certainly help tell a story, it doesn't always capture the whole picture. A living, breathing human manager can pick up on subtle cues — like maybe one team member has been juggling a family emergency, or another is part of a new mentorship program that’s paying off.
These nuances are necessary for contextual understanding, not to mention crafting a personalized employee development plan. AI simply can't replicate that level of empathy (and we probably shouldn’t want it to).
Let’s say you’re part of a giant corporation struggling with inconsistent performance reviews across departments. AI can analyze thousands of past reviews, scoping out biases and pinpointing best practices. That way, you're equipped with a standardized framework, making things more fair and transparent across the board.
Or, maybe you’re at a scrappy startup where time is of the essence (because isn’t it always?). AI-driven performance management tools can collect feedback and whip up insightful reports, giving you hours of your life back.
A recent University of Cambridge study found that people “inherently trust feedback from machines.” Moreover, employees perceived AI-powered feedback as more fair than human managers alone, especially in large organizations. With the right approach, AI can be your new best friend (for performance reviews, at least).
Source: Zensai
AI-powered performance management means:
AI is powerful, but it's not infallible. Algorithms can inherit biases from the data they're trained on, leading to unfair feedback and reviews. Again, context is key — a missed deadline might seem like a red flag, but maybe there were unforeseen technical hurdles or personal issues that AI wouldn't grasp. Overreliance on technology can also erode the manager-employee relationship and make your team members feel like cogs in a machine, like they don’t really matter.
We can’t emphasize this enough: AI is not a replacement for human judgment. It's a tool designed to complement managers' expertise, helping them make more informed decisions, have more meaningful conversations, and drive better performance outcomes for their people.
And sure, perhaps you’re still wondering: why can't we just let AI do its thing? Well, because nothing is perfect, and there are some things machines just don't understand, like:
In a recent PwC survey, 44% of business leaders said that their companies are planning to implement data modernization efforts in 2024 to take better advantage of generative AI. But the real magic happens when we combine that AI-generated data with actual human context.
So, how do you strike that balance? For starters, you let AI do all the heavy lifting (data analysis, identifying performance patterns). Then, you have a human manager pop in to interpret the findings and add that nuance and motivation we mentioned.
While AI can provide a great starting point for feedback, managers should always be encouraged to personalize it and have genuine, non-robotic conversations. This shows that you’re looking at the numbers and understanding the stories behind them.
Source: Zensai
Lastly, be open with your employees about where AI is being used and where it's not being used (i.e., not to make final hiring or firing decisions). This hybrid approach combines data-driven objectivity with good old-fashioned human intuition, creating a more holistic view of employee performance.
Before you unleash the algorithms, you must ensure the transition is seamless and stress-free for your organization. Integrating new tech can be tricky, and like any big shift, it requires a thoughtful, forward-thinking approach.
Here are our top tips for taking the leap (and making the transition as smooth as possible):
Right, so you've got this fancy AI tool all set to shake up your performance reviews. Now it’s time to take it from shiny new tech toy to prized team player.
First things first, align AI with your company's values. Take a step back and ask, "What are we trying to achieve?".
If your organization prioritizes innovation, AI should help you spot those creative sparks within your team. If collaboration is the goal, AI should analyze communication patterns and suggest ways to strengthen teamwork. The point is that the metrics AI tracks are in sync with your company's overall vision.
Next, establish trust. According to Microsoft and LinkedIn’s 2024 Work Trend Index report, only 39% of people globally who use AI at work have received training from their company. That means most employees are left to figure it out on their own, which can lead to confusion and mistrust — not exactly the outcome you want.
Invest in comprehensive training programs to combat this so everyone understands how AI is used and why. Maintain an open, ongoing dialogue about AI's role in performance reviews and allow employees to share feedback. Transparency will go a long way in building trust and positioning AI as a helpful tool instead of a threat.
AI can generate a ton of data, so don't let it bury your managers in information overload. Focus on the most actionable insights — the ones that can genuinely help employees grow and improve.
Use AI to create personalized development plans, spotlight strengths to celebrate, and find areas for improvement. Then, use those AI-generated insights to initiate meaningful conversations about their performance, career goals, and learning and development opportunities. Encourage them to ask questions and offer their perspectives. This puts everyone on the same page and helps make AI feel like a partner in your team’s success.
Ensuring AI consistently performs at its best (and upholds ethical standards) is an ongoing journey. Flemming Blåbjerg, head of digital transformation and compliance at Zensai, emphasizes the importance of monitoring and evaluating each AI service you use, thus building and maintaining trust with stakeholders. Blåbjerg adds that Zensai "leans very, very heavily on the framework of trustworthy AI that Microsoft provides" and sticks to the same three pillars for all AI usage:
To implement these principles, conduct a “thorough risk assessment” for each AI service you’re considering. This involves evaluating potential risks in relation to those three pillars — where does your AI tool currently stand in terms of lawfulness, ethics, and robustness? It's a proactive approach that keeps a watchful eye on AI and ensures that it’s being used responsibly.
In addition to Zensai's method, there are some broader best practices to consider.
Define specific, measurable, attainable, relevant, and time-bound (SMART) goals for your AI the same way you would an employee. Are you aiming to reduce bias in performance reviews? Or improving employee development plans? Track progress towards these goals and adjust your AI strategy accordingly.
Human oversight is everything. Review the data inputs and algorithms used by your AI models, and do it regularly. Look for any sources of bias or error, and make timely tweaks to keep your AI-driven performance insights fair, accurate, and consistent. Involve diverse stakeholders in these audits so that various perspectives are included, and always make sure you test any adjustments before implementing them.
Encourage your employees to share their experiences with a new AI-powered platform and address any concerns, misconceptions, or trust issues they may have. Their feedback can help you assess areas where AI could be improved.
As AI technology evolves, so should your understanding of its capabilities (and limitations). Investing in ongoing training for your HR team and managers is vital so they can effectively interpret and utilize all the new insights coming at them.
AI is becoming more sophisticated by the day, and we're on the cusp of some cutting-edge developments, including:
AI has incredible possibilities, yet one thing remains constant: human judgment is irreplaceable. It's up to us to interpret the data, make educated decisions, and build authentic relationships with our people.
After all, the most successful companies will be those that find the perfect synergy between human intuition and AI's analytical prowess. By discovering that sweet spot, we can create a performance review process that's fairer, more efficient, and — dare we say it again — enjoyable.
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Edited by Jigmee Bhutia
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