Gartner says performance management is too soft on underperformance. 7 fixes for mid-market People teams.

Playbook angle: To apply this in a performance management process, define what triggers an underperformance conversation and what happens next. Use the fixes below to set clear thresholds, manager actions and timelines in your review cycle.

Most People leaders I speak to in Tallinn, Stockholm and London don’t have a “bad performer” problem. They have a “nobody quite says it out loud” problem. A few people coast for a year, managers rate them “meets expectations” to avoid a hard conversation, the strong performers notice, and the pay round treats everyone roughly the same.

Gartner put numbers on that this week. At its HR Symposium/Xpo in London, Director Analyst Tony Guadagni presented “Hidden Drag: Why Performance Management Isn’t Driving a Culture of High Performance” (Gartner newsroom, Day 3 highlights, 8 October 2026). His point: performance management is meant to lift performance, and for most employees it doesn’t.

What Gartner actually said

In plain language, from the session takeaways Gartner published:

• Leaders aren’t happy with output. “Just 39% of CEOs and senior business execs say that current workforce productivity is sufficient to meet business goals.”
• Employees don’t feel helped. “Only 38% of employees say that performance management helps them perform in their role.”
• Problem 1 — too tolerant of underperformance. 49% of CHROs say their process effectively differentiates between core and low performance. Put the other way: about half don’t.
• Problem 2 — it doesn’t inspire high performance. Only half of employees believe performance impacts pay.
• Problem 3 — it’s disconnected from daily work. Just one-third of employees talk to their manager about performance at least monthly.
• Gartner’s three actions for HR. Change the narrative on underperformance by supporting managers to identify and address marginal performance; disproportionately reward employees who make outsized contributions; and embed meaningful performance conversations throughout the year.

Why mid-market teams feel this hardest

In a 150–800 person company, one coasting person on a team of six is visible to everyone. There is no big HR business-partner bench to coach managers through a difficult conversation, so many simply don’t have it. Performance notes live in a manager’s head or a stray doc, so when the review comes there is no evidence, and “meets expectations” is the safe answer. Then pay is set in a spreadsheet that is disconnected from the review, which is exactly how you end up with only half of people believing performance affects pay.

None of Gartner’s fixes need a big transformation programme. They need a clear bar, a monthly rhythm, and a system where the evidence and the pay decision live in the same place.

7 fixes for underperformance, pay and monthly conversations

1. Write down what “core” and “low” performance look like. You can’t tell the two apart, or defend the call, without a written bar for each level. Keep it short: three to five observable behaviours and outcomes per level. (More on this in Publish a talent bar by seniority.) In Revolut People: structured review scorecards that put evidence ahead of opinion, so every manager rates against the same bar.
2. Make performance a monthly topic, not a yearly one. Gartner’s one-third figure is the easiest to fix. Put a short, recurring 1:1 in every manager’s calendar with three standing questions: progress on goals, what’s blocking you, one piece of feedback each way. In Revolut People: structured 1:1s with AI-powered summaries, so the conversation is recorded and the next one picks up where the last left off.
3. Spot marginal performance early with live goals. Underperformance is easier to fix in March than in December. Goals that update as work happens show drift weeks before review season. In Revolut People: real-time goals and OKRs that cascade from company to team to person and sync with the tools teams already use, so progress is visible without chasing.
4. Give managers a simple route for the hard conversation. “Change the narrative on underperformance” in practice means: name the gap early, agree what good looks like, set a date, and support the person to get there. It should feel like coaching first, not a trapdoor. In Revolut People: continuous feedback any time in the year, and post-review plans (including performance improvement plans) with a named owner, so the follow-through doesn’t depend on memory.
5. Use calibration to separate core from low, not to average everyone. If almost everyone comes out “meets expectations”, calibration isn’t doing its job. Put goal progress, feedback and 1:1 history next to each rating and challenge the ones with no evidence. (See also Gartner on reviews and calibration.) In Revolut People: review cycles you run on your own cadence, with calibration and scorecards pre-filled from goal progress and 1:1s that managers then review and own.
6. Reward outsized contribution, visibly. Gartner’s word is “disproportionately”. If your top contributors get the same rise as everyone else, people stop believing performance matters. Agree up front how review outcomes feed pay, and explain each decision. In Revolut People: salary adjustments and promotions come out of the review as post-review plans, and because HRIS and compensation data sit in the same platform, the agreed change doesn’t have to be retyped into another system.
7. Ask employees Gartner’s question yourself. Run one pulse question after your next cycle: “Does our performance process help you do your job better?” Compare it with Gartner’s 38%. Then track it each cycle. In Revolut People: analytics on engagement, goal attainment, review cycles and performance trends, so you can see whether the changes moved anything.

Includes a price for your headcount + 3 fixes for your review cycle.

Where Revolut People fits, and where it doesn’t

Revolut People started as the in-house system Revolut uses to run performance across its own workforce. It covers the three problems Gartner names in one place:

• Underperformance: live goals and continuous feedback surface drift early; scorecards, calibration and post-review plans (including PIPs) make the follow-through fair and documented.
• Pay and high performance: promotions and salary adjustments flow out of the review, with HRIS and compensation data in the same platform.
• Day-to-day connection: structured 1:1s and feedback keep performance in the monthly conversation, not just the annual one.

To be straight about the limits: software won’t make a manager brave. The written bar, the pay philosophy and the decision to address marginal performance early are leadership choices. What a platform can do is make the right thing the easy thing, and keep the evidence where you can find it. Method context is in the playbook summary.

Bottom Line

Gartner’s message is simple: most performance processes are too soft on underperformance, too weak a link to pay, and too far from daily work. Only 38% of employees say the process helps them. You don’t fix that with a new rating scale. Write down your bar, make performance a monthly conversation, deal with marginal performance early and kindly, and let pay visibly follow contribution. Start with one team before your next cycle.

Free tools: estimate what your review cycle costs with the performance review cost calculator, or see if your HRIS is holding performance back with the HRIS switch checker.

FAQ

What did Gartner say about performance management in October 2026?

At Gartner HR Symposium/Xpo in London (8 October 2026), Tony Guadagni said only 38% of employees feel performance management helps them perform, and named three problems: tolerance of underperformance, a weak link to high performance and pay, and too little day-to-day connection.

How do we handle underperformance without damaging morale?

Name the gap early, agree in writing what good looks like, set a clear date and support the person to get there. Doing this monthly, not once a year, makes it feel like coaching rather than a surprise, and strong performers see that the bar is real.

How often should managers talk about performance?

At least monthly. Gartner found only one-third of employees talk to their manager about performance that often. A short recurring 1:1 with goal progress, blockers and feedback is enough to start.

Should performance reviews be linked to pay?

Gartner found only half of employees believe performance impacts pay, and recommends disproportionately rewarding outsized contributions. How you link the two is your policy choice; what matters is that the link is agreed up front and explained.

Is Revolut People available in Estonia, the Nordics and the UK?

Yes. Revolut People is available to businesses with a registered entity in the UK, the EEA or the US, which covers Estonia and the Nordic countries.