McKinsey says people-first performance management starts with how you run reviews. 6 fixes for mid-market People teams.

Playbook angle: To apply this in a performance management process, focus on how reviews are run, not just the form. Use the fixes below to improve manager preparation, evidence collection and the review conversation in your next cycle.

A Saturday-morning question for People leaders: if two of your managers reviewed the same person, would they land on the same rating? In most 150–800 person companies I speak to in Tallinn, Stockholm and London, the honest answer is “probably not”. Each manager has their own form, their own memory of the year, and their own idea of what “good” means.

McKinsey’s article “In the spotlight: Performance management that puts people first” (15 May 2024, by Amaia Noguera Lasa, Andrea Pedroni, Asmus Komm and Simon Gallot Lavallée) explains why that matters, and what to do about it.

1. What McKinsey actually said

In plain language:

• People-first pays. Companies that focus on their people’s performance are 4.2 times more likely to outperform their peers, with an average 30 percent higher revenue growth and attrition five percentage points lower.
• Four parts, one system. Performance management rests on four basic elements: goal setting, performance reviews, ongoing development and rewards. The right design varies by company; McKinsey calls it “fit-for-purpose”.
• Most companies are stuck. Leaders lack confidence in their systems, citing fragmentation, informal or “shadow” systems, misalignment and inconsistency. Even where everyone agrees on best practice (like regular feedback outside the annual review), many companies remain stuck in old ways of working.
• Reviews: the what and the how. McKinsey says reviews must balance results (“what”) with behaviour (“how”).
• Reviews: who decides. Companies lean on managers, committees, or a combination. In the combined model, senior managers and high performers are discussed in committees, while the rest of the workforce is evaluated by their direct managers.
• Reviews: the evidence. Only two in five companies use both upward and downward evaluation in individual reviews. McKinsey suggests wider input to build “a more comprehensive fact base”.

2. The mid-market hurdle: one manager, one form, one memory

Large companies have HR business partners and talent committees. A 300-person scale-up usually has a People team of two or three, and the review is whatever each manager writes in a shared doc in December. That is exactly the “shadow system” and inconsistency McKinsey describes. The ratings can’t be compared across teams, strong people in a tough manager’s team lose out, and nobody can explain afterwards why one person got a rise and another didn’t.

You don’t need a big committee structure to fix this. You need one shared scorecard, one short check before ratings go final, and a clear outcome for every review.

3. 6 fixes for a people-first review cycle

1. Score the “what” and the “how” separately. Put results and behaviours in two clearly labelled sections, so a high performer who damages the team, or a great team player who misses every goal, shows up honestly. In Revolut People: structured review scorecards that put evidence ahead of opinion, so every manager rates against the same criteria.
2. Use one scorecard for everyone at a level. McKinsey’s “inconsistency” problem starts with every manager inventing their own form. Agree one scorecard per level and stick to it for a full cycle. In Revolut People: review templates set once by the People team and used by every manager in the cycle.
3. Copy McKinsey’s manager-plus-panel model, in a small way. Managers write the review; then a short calibration meeting (a few senior leaders plus People) checks the ratings for senior roles, top performers and anything that looks off. That is McKinsey’s combined model sized for a mid-market company. In Revolut People: calibration is a built-in step of the review cycle, so ratings are compared side by side and adjusted before anyone sees a result.
4. Feed the review with evidence from the whole year. McKinsey’s point about a “fact base” is that one manager’s memory of December is not enough. Pull in goal progress, 1:1 notes and feedback from colleagues. (Revolut’s own experience is that peer ratings tend to be too generous, so let peers add context and let the manager own the rating.) In Revolut People: AI pulls together feedback, 1:1 notes and scorecards to help managers write a clearer, fairer review that they then check and own.
5. Give every review a clear outcome. A review with no next step feels like paperwork. Each one should end in something concrete: a promotion path, a pay change, a development plan, or a performance improvement plan. In Revolut People: post-review plans (promotion roadmaps, salary adjustments, performance improvement plans) are triggered straight from the review, with a named owner.
6. Ask McKinsey’s health-check questions after the cycle. McKinsey suggests leaders ask: “Are we getting the expected returns from the time invested in the performance management process, and does it drive higher performance and capabilities?” and “Do we have a performance culture?” Ask your managers and a sample of employees, and write down the answers for next time. In Revolut People: analytics on review cycles, ratings and engagement, so you can compare one cycle with the next.

The PDF goes to your work email. More on the method at peopleperformanceplaybook.com.

4. Where Revolut People fits, and where it doesn’t

Revolut People started as the in-house system Revolut uses to run performance reviews across its own workforce. The part that matters most for this McKinsey piece is Reviews and calibration: one scorecard per level, a calibration step before results go out, and a clear post-review plan for every person. Goals, 1:1s and feedback feed the review, and HRIS and compensation data sit in the same platform, so a pay change agreed in the review doesn’t get retyped somewhere else.

To be straight about the limits: software won’t decide what “good” looks like for your company, and it won’t make a calibration meeting honest. Those are leadership choices. What it can do is replace the shadow spreadsheets with one process everyone follows. If you want to go deeper first, related reads: Gartner on reviews and calibration and Publish a talent bar by seniority.

Bottom Line

McKinsey’s research says people-first performance management pays off: 4.2 times more likely to outperform peers. But most companies are held back by inconsistent, shadow processes. For a mid-market People team, the fastest win is the review itself: score the what and the how, use one scorecard, add a short calibration check, base it on a year of evidence, and give every review a clear outcome. Try it with one department 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 is McKinsey’s “people-first” performance management article about?

“In the spotlight: Performance management that puts people first” (McKinsey, 15 May 2024, by Amaia Noguera Lasa, Andrea Pedroni, Asmus Komm and Simon Gallot Lavallée) says performance management rests on four parts: goal setting, performance reviews, ongoing development and rewards. It argues each company should make deliberate design choices across those four parts rather than copy a standard template.

What results does McKinsey link to focusing on people’s performance?

McKinsey reports that companies that focus on their people’s performance are 4.2 times more likely to outperform their peers, with an average 30 percent higher revenue growth and attrition five percentage points lower.

Who should run performance reviews: managers or a committee?

McKinsey describes three options: managers, committees, or a mix. In the mixed model, senior managers and high performers are discussed in a committee, while everyone else is reviewed by their direct manager. For a mid-market company, a simple version is: managers write the review, and a short calibration meeting checks the ratings before they are final.

Should we use 360 reviews?

McKinsey found only two in five companies use both upward and downward evaluation and suggests 360° input for a fuller picture. Revolut’s own experience is that peer ratings tend to be too generous, so in Revolut People the manager owns the rating and peer feedback adds context. Either way, the goal is the same: more evidence than one person’s memory.

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.