5 Reasons Why Annual Performance Reviews Don't Work

reasons why annual performance reviews don't workLet’s face it, we’ve all had them and we all hate them. We’ve endured the awkward situations and the difficult topics. It’s something no one, not even managers look forward to.

The old school, once-a-year employee performance review is tired, and it’s time to put it to rest.


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Here are five reasons annual performance reviews don’t work and why you should abandon them for regular employee performance conversations:


1. Employees need constant feedback.


The best kind of performance review is the one that never ends. An ongoing review provides employees with constant feedback on a daily or weekly basis. It lets them know right away whether they are doing something wrong or not so behavioral corrections can be made promptly, rather than months down the line when it has become habitual. Continual feedback helps employees track goals and objectives while providing an updated basis for making improvements.


2. Salary ties cause too much stress.


Generally performance evaluations are tied to salaries or hourly wages. This makes the process very delicate. If an employee’s raise or salary for the following year is tied to the performance evaluation, then both parties may feel tension or anxiety.

Some managers may feel bad about giving an employee a negative review, while employees sometimes find themselves fretting weeks or even months in advance. Managers may end up skipping tougher topics or criticisms to avoid causing employee dissonance. To prevent this, salary discussions and performance evaluations should be separate entities.


3. Gaps in performance reviews render them useless.


By the time the yearly performance evaluations come around, managers may have already forgotten the material they were going to come to an employee with. This causes them to base most of their recommendations off of recollection of prior events from memory.

The truth of the matter is… there should be nearly nothing to talk about in an annual performance evaluation. If you are a good manager, anything worth addressing in a review should have been dealt with at the time of occurrence and both parties should be past those issues. This includes regular updates to employee goals and objectives.


4. Performance evaluations are too formal.


For the most part, performance reviews are very formal and structured. There is little room for an open dialogue, thus creating an uncomfortable environment for employees. Too much formality can in turn cause employees to be less open to criticism.

To maximize efficiency, a performance evaluation should be short and to the point. It is something that can take place over lunch or maybe on a coffee break during a work day. It should be one-on-one, and feel more like a conversation than an interview.


5. There is only one side to the story.


Most of the time, performance evaluations feel like a sit-down grilling of employees based on what mistakes they’ve been making throughout the year. The problem is that they don’t offer enough room for the employee to comment on your performance as a manager, or bring up any other general issues that may be affecting the employee indirectly.

To combat this, employee conversations should be two-way, so you as a boss can get feedback on what improvements you need to make as well. Small changes like this will strengthen communication between managers and employees.



Finding that all of this reminds you too much of yourself or someone you know? An effective performance management strategy should help you better track goals, recognize achievements, coach employees, and evaluate performance. Download our ebook, Moving Beyond Performance Management is Broken, to see how you can take a step in the right direction.

Moving Beyond Performance Management is Broken