2026 Performance Management Survey: What 61% of 934 Leaders Couldn't Prove to Their CEO

How organizations are evolving performance management to drive business execution, and why the evidence hasn't caught up with the belief.

Introduction

Ask an HR leader whether performance management is helping the business, and most will say yes without hesitating.

Ask them to back that up with a number their CEO would accept, and the certainty starts to wobble.

That gap, between how confident HR feels and how little proof there actually is in business impact, is the center of this research. In August 2026, Betterworks surveyed 488 HR leaders and 446 business leaders across the US and UK, all Director-level or above at organizations with 500 or more employees, to answer one question: has performance management genuinely evolved from an HR review process into a system that drives business execution? Or is it still catching up?

The short answer: not yet. But the reasons are more specific, and more fixable, than most HR leaders expect. This report walks through six findings from the data, what they mean for 2027 planning, and a practical agenda for closing the gap.

Finding 1: Confidence is outrunning proof

HR strongly believes performance management contributes to business priorities. Most can't demonstrate that contribution with a clear business metric.

This is the most urgent credibility gap in the data: confidence is high, but evidence is thin, or built on HR activity measures that won't hold up in a business conversation.

• 84.8% of HR leaders are very or extremely confident that performance management improves organizational priorities. 

• Only 43.9% say they could answer the CEO with clear business metrics today. 

• Another 31.4% could offer some business evidence, while 23.2% would primarily point to engagement or activity metrics. 

• Business leaders are even less confident in the available proof: only 34.3% say they could provide clear business metrics demonstrating impact. 

• Measuring outcomes is the single most-selected breakdown point for both audiences: 40.8% of HR leaders and 41.0% of business leaders. 

What this means: HR can't lean on process completion, participation, check-in frequency, or engagement scores to demonstrate strategic value. As budgets tighten and CFOs ask harder questions, HR needs a different partnership model: business leaders help define the outcomes, Finance and Operations help set credible baselines, managers supply evidence from real work, and HR owns the operating system and measurement discipline rather than every outcome by itself.

What to do next:

• Agree with business leaders on three to five organizational outcomes performance management is expected to influence, before 2027 planning locks in.

• Establish baselines before changing the process.

• Replace review-completion reporting with measures like percentage of goals linked to current priorities, time to realign goals after a strategy change, manager time spent on admin, and speed of performance-risk identification.

• Review evidence quarterly with HR, Finance, Operations, and business leadership.

• Be explicit about whether a given piece of evidence shows activity, association, improvement, or causation.

Finding 2: HR and the business don’t see the same priorities

Both HR and business leaders were asked the same question: which priorities are getting the most attention from your executive team right now? Their answers barely overlap.

(Respondents selected up to three priorities. The central differences held directionally after descriptive adjustment for country, organization size, and industry.)

Both groups care about organizational performance. They just perceive the executive agenda differently.

What this means: HR may be building a valid case around workforce capability and AI. But business leaders, the people actually running day-to-day operations, say leadership is watching revenue, speed, and efficiency instead. That doesn't mean HR should abandon people outcomes, but it does mean translating them into business language before designing the process, not after it's ready for business adoption.

What to do next:

• Begin planning with joint HR–business outcome sessions, not an HR-only kickoff.

• Ask business leaders to name the execution risks the performance system should help address.

• Translate people outcomes into business language: goal quality → better resource prioritization; coaching → earlier problem resolution; workforce capability → execution of strategic initiatives; AI enablement → productivity and quality gains; continuous alignment → faster response to changing priorities.

• Assign HR and business co-owners for each intended outcome.

• Report both workforce indicators and the organizational priorities they're meant to support, together rather than separately.

Finding 3: Redesign is not landing in the business

HR sees substantial transformation. Business leaders are far less likely to experience the formal process as redesigned, adaptive, or different from what came before.

Many HR teams have invested real effort in redesigning performance management. But implementation activity isn't the same as a changed manager or employee experience.

• 69.3% of HR leaders say performance management was redesigned in the past two years, compared with 43.7% of business leaders. 

• Including redesigns currently underway, the gap widens: 79.5% of HR leaders versus 53.4% of business leaders.

• 50.8% of HR leaders say goals update quarterly or as priorities change, compared with 36.8% of business leaders. 

• Within the business sample, organizations with a completed or active redesign are more likely to report at least some business evidence (76.9% vs. 55.3%), strong manager AI effectiveness (62.2% vs. 37.5%), and ongoing (rather than annual) performance management (36.1% vs. 18.8%).

What this means: The real test of transformation isn't whether HR shipped new forms, competencies, check-ins, or technology. It's whether managers and employees actually experience more relevant goals, faster adaptation, less admin work, better coaching, and stronger evidence of contribution. HR's role shifts from designer of a better version of the old program to architect of a system co-owned with the business.

What to do next:

• Ask managers and employees directly what materially changed after the last redesign.

• Map the experience from the manager's and employee's point of view, not just the HR administration workflow.

• Stand up an advisory group of managers and employees to co-design next year's approach.

• Pilot changes within one business unit with an engaged executive sponsor.

• Define success by changed behavior and outcomes, not configuration or launch completion.

Finding 4: The formal review is losing the trust it once had

Leaders still value accountability and evaluation. The formal review mechanism itself is losing credibility as the center of performance management.

This isn't an argument for abolishing reviews. It's a sign that organizations need to separate the value of managing performance from the value of the current review process.

• 76.9% of business leaders say formal reviews contribute positively to organizational priorities. 

• Yet 67.0% say eliminating formal reviews would either improve outcomes or have no impact at all: 40.1% say outcomes would improve, 26.9% say there'd be no impact. 

• 70.6% say their own managerial role would be unchanged or better if HR stopped conducting formal reviews. 

• 69.1% still describe their organization's formal process as annual or semiannual reviews, alone or with periodic check-ins. Only 28.0% describe an ongoing model. 

• Priorities and goals are moving at different speeds: 69.7% of HR leaders say business priorities change quarterly, monthly, or continuously, but only 50.8% say goals update that fast. For business leaders, it's 59.6% versus 36.8%. 

What this means: The right positioning is "beyond the review," not "anti-review." Formal reviews can still provide documentation, calibration, fairness, and accountability. But they should become periodic synthesis and decision points inside an ongoing system, not the primary moment when goals, evidence, coaching, and development get addressed.

What to do next:

• Audit every review step and ask what decision, development outcome, or business result it actually enables.

• Eliminate or simplify steps that exist mainly for administrative completion.

• Move goal alignment, evidence capture, feedback, coaching, recognition, and risk identification into the flow of work.

• Use formal reviews to summarize accumulated evidence and support consequential decisions.

• Introduce event-driven goal updates tied to strategy, structure, or market changes, not a fixed calendar.

• Preserve transparent standards, documentation, calibration, and employee recourse.

Finding 5: Managers are the key to evolving. They're also HR's biggest blind spot.

HR believes managers are highly capable. But the business leaders answering this survey are themselves the managers in question, Director-level-and-above people-leaders rating their own effectiveness and their peers'. Their self-assessment tells a very different story than HR's outside view.

Managers identify clear support needs, and they're candid about it: coaching for improved performance (46.2%), helping employees prioritize (42.2%), making objective decisions (40.6%), helping employees use AI (40.6%), and translating strategy for the team (34.8%). 

What this means: Managers shouldn't be treated primarily as the delivery channel for an HR process. They need to become co-owners of the new performance operating model, with help translating strategy, prioritizing work, preparing for conversations, coaching in context, and evaluating AI-enabled work responsibly. And when the people actually doing the managing are this candid about their own gaps, that's a signal worth acting on, not a data quirk to explain away.

What to do next:

• Segment manager needs by role, level, workforce type, and operating environment.

• Identify the manager tasks that eat the most time or require the most reconstruction from memory.

• Provide role-specific workflows, prompts, and decision support.

• Give managers clear policy and training for evaluating AI-enabled employee work.

• Bring performance support into existing work and meeting rhythms rather than a separate tool to check.

• Measure manager time-to-value and perceived usefulness, not just task completion.

Finding 6: HR blames the tech. Business blames the workload. Both agree on where performance actually breaks down.

Ask HR and business leaders what's broken, and they land on nearly the same answer. That agreement, more than any other single stat in this survey, is the clearest place to start fixing things together.

• Both sides converge on the same central breakdowns: measuring outcomes (40.8% HR / 41.0% business), goal alignment (38.5% / 39.2%), and feedback (37.1% / 36.5%). 

• Where they split is on why it breaks down. Technology limitations are the most-selected obstacle among HR leaders, at 31.4%. Only 16.8% of business leaders selected it. 

• Business leaders more often point to administrative burden on managers (26.9%), managers lacking time (25.8%), managers unsupported in coaching (24.9%), goals changing too quickly (24.7%), and inconsistent manager adoption (23.5%). 

• They also converge on future capabilities: continuous goal alignment (35.9% / 39.9%), AI coaching recommendations (34.8% / 26.5%), predictive performance risks (28.5% / 25.8%), and business-execution dashboards (26.4% / 25.3%). 

What this means: A new tool that doesn't touch outcome measurement, goal alignment, or feedback just digitizes the same broken process. Technology matters, but replacing it without modernizing the underlying approach doesn't fix anything. The shared agreement on alignment and measurement gives HR a genuine, low-friction starting point for partnership, even where the two groups diagnose root causes differently. The transformation agenda needs to combine technology with outcome definition, process simplification, adaptive goal cadence, manager enablement, workflow integration, evidence and analytics, AI governance, and change management.

What to do next:

• Start with the operating problems the organization must solve, not a technology requirements list.

• Build a transformation roadmap with distinct workstreams for process, people, data, technology, governance, and adoption.

• Make continuous goal alignment and outcome measurement foundational capabilities, not add-ons.

• Use AI to support alignment, coaching, preparation, evidence, and risk identification, not merely to draft review text.

• Define explainability, data access, human oversight, and employee trust requirements before scaling AI.

• Pilot the complete operating model in one business area and compare it against the legacy approach.

2027 Action Plan: What HR Leaders Should Do Differently

The most important shift: Stop planning a better review cycle. Start building a real-time approach to performance that drives business execution.

That means six changes.

1. Start with 3 business outcomes to impact

Before designing forms, ratings, or schedules, agree with business leaders on three outcomes performance management can influence: faster execution of strategic priorities, improved productivity, faster response when performance falls behind, stronger AI-ready workforce capability, or better retention in critical roles.

Only 34% of business leaders can currently provide clear metrics demonstrating impact, while 41% of both HR and business audiences say measuring performance’s impact on outcomes is a leading breakdown.

Do differently: Give each outcome an HR co-owner, a business co-owner, a baseline, a target, and a quarterly review cadence (monthly if your business or industry is changing quicker).

2. Design with business leaders, not for them

Treat business leaders and people managers as co-designers and primary users, not participants required to complete a process. They are experiencing friction in the process and also are the key to a transformation. They're also asking for help with coaching (46%), prioritizing work (42%), objective decisions (41%), and managing AI-enabled work (41%).

Do differently: Form an advisory group of people leaders at various levels, test workflows with real managers, and measure time saved and usefulness, not completion.

3. Replace calendar-led goals with real-time adaptive alignment

Business priorities move faster than formal performance goals. 60% of business leaders say priorities change at least quarterly, but only 37% say formal goals update quarterly or when priorities change.

Do differently: Establish specific events that trigger goal review. Show which team and individual goals are affected by a priority change. Allow goals to be revised, paused, or retired without waiting to kick off a new HR cycle. Track how quickly strategic changes reach individual work and speed to impact.

4. Make reviews lighter, and everything between them stronger

The answer isn't necessarily eliminating reviews. It's rethinking what they're for. 77% of business leaders say reviews contribute positively, yet 67% foresee no downside, or even an improvement, from eliminating them.

Do differently: Remove steps that don't improve a decision, development outcome, or business result. Automate the capture of feedback, evidence, recognition, and progress throughout the year, but keep the judgment calls, like coaching and consequential decisions, human. Use formal reviews to summarize evidence and support decisions. Stop asking managers to reconstruct an entire year from memory.

5. Build manager confidence for leading in an AI era

AI should help managers execute, not just draft review comments. 75% of HR leaders rate managers highly effective at supporting employees' AI use, but only 51% of business leaders rate themselves that way. That's a readiness blind spot HR needs to address directly.

Do differently: Establish clear policies for AI-enabled work. Train managers to evaluate AI-supported output and coach employees responsibly.

6. Measure whether transformation actually lands

69% of HR leaders say performance management was redesigned in the past two years, compared with only 44% of business leaders. Next year's transformation can't be measured by whether HR launched it.

Do differently: Track whether managers and employees experience more relevant goals, less admin work, better conversations, faster adaptation, earlier problem identification, and stronger evidence of business contribution.

A practical 90-day agenda

1. Define: Select the business outcomes and executive sponsors.

2. Diagnose: Interview managers and employees about friction and value.

3. Simplify: Identify review activities to eliminate, automate, or redesign.

4. Pilot: Test agile goal alignment, automated evidence capture, and manager support in one business unit.

5. Measure: Establish baselines and compare the pilot with the legacy process.

6. Scale: Expand only the practices that improve manager experience and business evidence.

The planning test: Will next year's approach help managers keep employees aligned with changing priorities, and give executives credible evidence that it improved execution?

Conclusion: The gap is the opportunity

The most important finding in this survey isn't the number that sounds alarming. It's the pattern underneath: HR believes performance management is doing more for the business than it can currently prove, at exactly the moment CFOs and CEOs are asking harder questions about what people programs deliver.

That gap doesn't mean the belief is wrong. HR leaders who read this report and recognize their organization in it don't need a full rebuild. For most, the signals already exist: goals, feedback, coaching conversations, manager check-ins. The work is connecting them to outcomes the business already cares about, and building the discipline to report on that connection consistently and in faster loops as you evolve.

Organizations that close this gap won't be the ones with the biggest HR technology budgets. They'll be the ones that stopped treating performance management as a compliance cycle and started treating it as a real-time approach  for business execution, one connected to managers, to priorities, and to proof.

Where Betterworks fits: Betterworks brings real-time performance management through goals, feedback, conversations, 1:1 meetings, and talent intelligence into the flow of work, so goal alignment, manager support, and evidence of business contribution don't depend on a once-a-year review or a manager's memory. That's the shift this data points to: from HR process to business execution engine.

About this research

Betterworks surveyed 488 HR leaders and 446 business leaders in the US and UK, all Director-level or above at organizations with 500 or more employees, across industries, in August 2026. Full methodology available on request.