Here’s why the annual review needs an overhaul

by Mar 28, 2019Managing People & Organizations, Performance Management, Systems Thinking

The annual review has been a business staple for decades and sitting down annually with employees to discuss performance remains a continued practice, despite calls for its demise. While the format and tone may have changed over the years, what it needs is an actual overhaul. For the first time in history, any given company may have up to five generations working alongside each other, with millennials effecting as much change on policies and process as their boomer predecessors did. It’s not only the demographic differences that need to be considered, but also the line of sight to rapidly changing roles that can make defining annual goals and objectives challenging.

So, while most businesses and employees still need a formal, on-the-record summary of performance from the past year, the overall process needs to evolve to accommodate the changing, modern workforce and faster pace of business. Employers must not only balance the needs of several generations in the workplace, they also must shift their mindsets as to the function and value of performance reviews, and their role for employees. When it comes to revamping the annual review, employers need to consider the following, relative to each generation:

Building your cadence/frequency – Perhaps one of the downsides of the digital age is that we have all become used to, and indeed expect, instant responses. Having grown up in an era of “instant gratification” from social media, instant messaging and text, millennials and their younger counterparts are much more likely than others to require constant feedback and more frequent check-ins. This is actually a good thing. Managers have long been encouraged to provide regular feedback and periodic check-ins, but what actually makes feedback relevant is when it occurs in a timely manner. That is to say, not at a set date but as an immediate opportunity to either praise a successful achievement or coach an employee with a ‘teachable moment’. Some companies have a formal structure in place which may include a weekly or monthly meeting with each employee to discuss their progress, performance, and their developmental needs.  Others have adopted programs that are less formal but keep to the spirit of ‘coaching’ rather than evaluating. In all cases, the focus is now much more on the employee and what they need to succeed, delivered on an on-going basis.

Communication style – While all generations value communication, each has a different opinion on what is the best way to communicate. Generally speaking, preferences should be taken into consideration, but performance-related communication is still best done face-to-face (or video conference calls for remote workers). There is a strong message in a manager taking time out to meet with an employee and giving them their full attention, as this is both a tangible demonstration of the employee’s worth to the company and provides more certainty that the message was clearly received. It also allows the manager to pick up on body language and other visual cues that could provide useful positive – or even negative – insight. That said, feedback should never flow in one direction only. Managers need to build trust with two-way dialogue that encourages the exchange of candid feedback and ideas. When it comes to digital communication, this is best saved for timely meeting summaries and confirmation of next steps.

Changing the script – Not surprisingly, the traditional annual review has long been dreaded by managers and employees alike and is widely documented to be ineffective and demotivating. And the formal, numerical ranking review of yester-year is dead – at least among more progressive employers. The pace and evolution of business means the annual review is just a step in the process; evaluating against a job description should be occurring throughout the year while the annual review is a reflective summary of the feedback that has already been given. That way, there should be no surprises regarding performance. In fact, some companies are moving to a more supportive system of frequent and ongoing coaching that is future-focused rather than dwelling on the past. Think about how you can shift the conversation to opportunities for growth and development and to goals that actually have meaning to the individual as well as the business. This will help with motivation, engagement and retention of talent, and encourage employees to take ownership of their development. Be clear on the competencies required of the successful employee and use this as a starting point to assist them in achieving their career objectives. Be prepared to discuss how the employee can further develop those competencies and how you can help.

Companies still need a mechanism for providing feedback, supporting promotions or terminations, and making decisions on who merits a raise. However, more frequent check-ins provide better opportunities to engage and grow employees – or even communicate expectations and correct course – in an efficient and meaningful way.

Cite as:

Candido, J. (2019) Here’s why the annual review needs an overhaul. Being Better Matters 28 March. Available at (accessed: date of your access)

Authors profile:

Janet Candido

Janet Candido combines strong business and HR skills to help organizations achieve their strategic goals. Janet is a creative problem solver with over 20 years in the Human Resources field. She is an authority on workplace systems and culture, and applies her expertise to provide innovative solutions for clients. Her goal is to help organizations, executive teams and their employees reach optimal performance, applying business knowledge to assist organizations address their HR needs.

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