---
title: "First-year performance reviews: don't chase fairness"
description: A new company or Japan entity has no facts to grade in year one. Write expectations, record facts, have one conversation, and set grades and curves in year two.
image: https://nobusato.jp/hubfs/covers-2026-11/first-year-performance-review-cover-en-2026-10-m.png
---

[Nobu Sato](https://nobusato.jp/en?hsLang=en)

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[日本語](https://nobusato.jp/ja/blog/first-year-performance-review)[English](https://nobusato.jp/en/blog/first-year-performance-review)[中文](https://nobusato.jp/zh/blog/first-year-performance-review)

Organizations & Hiring

In this article

1. [Why does a detailed review system break in year one?](https://nobusato.jp/en/blog/first-year-performance-review#s1)
2. [What Japanese employees actually complain about](https://nobusato.jp/en/blog/first-year-performance-review#s2)
3. [Year one: expectations, facts, one conversation](https://nobusato.jp/en/blog/first-year-performance-review#s3)
4. [Year two is when distributions make sense](https://nobusato.jp/en/blog/first-year-performance-review#s4)
5. [Someone will feel it's unfair](https://nobusato.jp/en/blog/first-year-performance-review#s5)

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# First-year performance reviews: don't chase fairness

Grades and curves wait for year two

[Nobu Sato](https://nobusato.jp/en/profile?hsLang=en)7 min read

Contents5

1. [Why does a detailed review system break in year one?](https://nobusato.jp/en/blog/first-year-performance-review#s1)
2. [What Japanese employees actually complain about](https://nobusato.jp/en/blog/first-year-performance-review#s2)
3. [Year one: expectations, facts, one conversation](https://nobusato.jp/en/blog/first-year-performance-review#s3)
4. [Year two is when distributions make sense](https://nobusato.jp/en/blog/first-year-performance-review#s4)
5. [Someone will feel it's unfair](https://nobusato.jp/en/blog/first-year-performance-review#s5)

In its first year, a new company or a new Japan entity should not try to make performance reviews fair. It should try to make them possible. Fair, granular, multi-dimensional systems need a year of facts you don't have yet. Build them on day one and they lock up the first time anyone tries to use them.

## Why does a detailed review system break in year one?

Because there are no facts yet. A granular review assumes you already know what good and average look like in each role, and that you've seen at least one real spread of people. A new entity has neither. The roles were just written. The people were just hired. The customers were just met. Score them on a five-by-five grid and what you're scoring is the reviewer's impression.

The headcount doesn't work either. Picture HQ sending an eight-person Japan entity its review template: five dimensions, five grades, and a forced distribution with 10% at the top and 10% at the bottom. Ten percent of eight people is 0.8 of a person. Forced distributions are built for thousands. Rank eight people and you mostly rank how close each one sits to the boss.

Large companies have been backing away from this for a decade. In the April 2015 Harvard Business Review, Deloitte said that creating its ratings consumed close to 2 million hours a year. The same article cited a 2000 study finding that 62% of the variance in ratings could be explained by the raters' own quirks of perception. Deloitte's redesign had every team leader check in with each team member once a week. In November 2013, Microsoft's HR head Lisa Brummel told employees by email that the company was ending stack ranking: "no more curve," "no more rankings."

If companies with tens of thousands of people found it too heavy, an eight-person entity doesn't need to start there.

## What Japanese employees actually complain about

Unclear criteria. Granularity barely comes up.

In 2018 the staffing firm Adecco surveyed 1,532 working adults in Japan, from their 20s to their 60s. 62.3% were dissatisfied with their employer's evaluation system. The top reason, at 62.8%, was that the criteria were unclear. Next, at 45.2%, was that results varied with the evaluator's values and experience and felt unfair. Third, at 28.1%, was that feedback and explanation were insufficient or missing. In the same survey, 77.8% of people who evaluate others said they did it appropriately.

Six in ten of the evaluated are unhappy. Nearly eight in ten evaluators think they're fine. The gap between those two numbers is unwritten criteria and unexplained results. More dimensions won't close it.

The standard Japanese practice is a goal-setting interview at the start of the period (kishu mendan) and a review against those goals at the end, often inside a management-by-objectives framework. The practice is sound. It usually goes wrong at the start, when the goals are written as "actively drive the business" or "improve customer satisfaction" and there's nothing to check against twelve months later. Add the Japanese habit of rating toward the middle, which I wrote about in [In Japan, "neither agree nor disagree" is an answer](https://nobusato.jp/en/blog/japan-neutral-survey-answers?hsLang=en), and a five-grade form ends up as a sea of threes.

## Year one: expectations, facts, one conversation

That's all I'd build in the first year.

**Write expectations.** In the first month, or at the start of the fiscal year, the manager and each person write down a handful of expectations. Each one says what done looks like. Two distributors signed by month six. A first customer case you can cite publicly, live within the year. Three straight months of on-time delivery. In [Building a Japan entity from zero](https://nobusato.jp/en/blog/method-from-zero?hsLang=en) I argue that year one should be judged on milestones rather than activity, and this is the same idea. Calls made and meetings held don't belong on the list.

**Record facts.** Once a month, the manager spends ten minutes writing two or three things that happened for each person. Who, did what, with what result. When someone says "I drove that deal," write it down as a claim. It becomes a fact when another person or an outcome backs it up. Keeping claims and facts separate is the first rule in [Ground rules: where facts come from and who decides](https://nobusato.jp/en/blog/method-principles?hsLang=en). After a year each person has twenty or thirty entries. That's worth more than any rating form.

**Have one conversation.** At year end, sit down with each person, the expectations from month one and the year's record on the table. Which expectations were met, which weren't, and for the misses, was it the person or was the expectation wrong to begin with? In year one the second answer comes up often. Don't assign a grade in this conversation.

And bonuses? In year one, base them on how far expectations were met plus the manager's judgment, with the reasons written down and tied to recorded facts. It isn't precise. It is explainable, and the survey above says that's what Japanese employees care about most.

Year-one reviews stop at one conversation; grades wait until a year of facts exists

The author's suggested process for new Japan entities and companies up to a few dozen people. A judgment, not a statistic

1. Month 1Write expectationsEach one states what done looks like, written as a milestone; activity counts stay out
2. MonthlyManager records factsTwo or three per person: who, what, result. Self-reports logged as claims first
3. Month 12One conversation, built on factsCheck against expectations; separate a missed target from a wrong target. No grade yet
4. Year 2Look at the spread, then set gradesLay out the year's records, see the real distribution, then decide how many grades and whether to force a curve

Year one is for collecting facts. Grades, distributions and curves can wait for year two.

Figure 1. A first-year review process for a new company: write milestone-based expectations in month 1, have the manager record two or three facts per person every month, hold one fact-based conversation in month 12 with no grade, and only from year 2 decide grades and whether to use a distribution, based on the year's record.

## Year two is when distributions make sense

Lay out a year of records and for the first time you see a real spread. Maybe two of the eight clearly beat expectations, five met them, one fell well short. Or maybe all eight met them, because the expectations were too low. Those call for very different fixes, and you can't tell them apart without the facts.

Now decide how many grades, what each one says, and how they link to pay. Write the grade definitions from the actual events you recorded in year one. They will work better than adjectives copied from HQ's template. As for a forced distribution, my view is that it can wait until you have a few dozen people and enough managers that their scales need aligning.

None of this means HQ's system is useless. Once the Japan entity grows, aligning with it is a matter of time. [Don't run a startup-stage entity like head office](https://nobusato.jp/en/blog/dont-run-a-startup-entity-like-head-office?hsLang=en) is about timing.

## Someone will feel it's unfair

Yes. Your best performer may get a conversation that sounds a lot like the one the merely adequate person got, and a bonus that isn't much bigger. That's the price of doing year one this way. I won't pretend it isn't there.

What you can do is say it plainly in that one conversation. This year we're collecting facts. Here is what you delivered, written down. We'll use it when we set grades next year. Then actually use it.

If you're setting this up now, the cheapest step is also the first one. Open one shared page per person this month and write down two things that happened. The grades can wait a year. Facts you didn't write down can't be recovered later.

Sources (as of November 2026)

- [Marcus Buckingham & Ashley Goodall, "Reinventing Performance Management," Harvard Business Review (April 2015)](https://store.hbr.org/product/reinventing-performance-management/R1504B)
- [CNN Money, "Microsoft kills employee-ranking system" (2013)](https://money.cnn.com/2013/11/13/technology/enterprise/microsoft-stack-ranking/index.html)
- [MONOist, report on the Adecco 2018 survey of attitudes to performance evaluation. The original release could not be found on Adecco's site; figures are as reported by MONOist (2018, Japanese)](https://monoist.itmedia.co.jp/mn/articles/1806/28/news073.html)
- [Nihon no Jinjibu, reprint of the Adecco press release of June 18, 2018 (2018, Japanese)](https://jinjibu.jp/news/detl/15029/)

---

Author

[Nobu Sato](https://nobusato.jp/en/profile?hsLang=en)

Launching in Japan, starting with people and systems. I write about building organizations, sales teams and technology organizations in Japan, in English, Japanese and Chinese.

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