Three Reasons Annual Employee Reviews are Ineffective Evaluations

Annual reviews are a long-used form of performance management that many companies use more out of tradition rather than strategy. Why aren't annual employee reviews effective anymore, and what can HR do instead to evaluate teammate performance?

1. Limited Opportunity for Coaching

When performance is measured once every year, managers lose the ability to provide continual, 360-degree feedback. This loss of consistent and real-time feedback creates room for miscommunication and lack of clarity.

Employees have fewer chances to ask clarifying questions and better understand their goals, and managers have fewer opportunities to offer feedback and coach to improve performance. The result? Employees struggle to achieve goals, leading to lower retention and higher turnover rates. 

2. Too Much Room for Error

Performance review panic stands in the way of meaningful direction and improvement. Employees are often so concerned about "getting a good score" that they approach the meeting without any plan for development or growth. This stress can lead employees to be too overwhelmed to ask the questions necessary to help them navigate the upcoming year.

No questions means no answers, which ultimately leaves a lot of room for error.

3. No Accountability Measure

Without regular check-ins, employees are only held accountable during their performance reviews, not throughout the year. The problem with this end-of-year accountability is that it’s typically coupled with an end-of-year rush.

It’s nice to have employees working full-steam at the end of the year, but not when it’s at the expense of time management and productivity during the rest of the year. Rushed work typically means subpar work.

Solutions: Performance Management Best Practices

HR should implement better performance management using continual and well-rounded feedback, regular check-ins, and clear goal setting. This can be accomplished with weekly or biweekly 1:1 meetings.

These meetings empower managers to be better coaches and better ensure compliance on an ongoing basis using documentation that tracks progress from one week to the next. Even better, robust HRIS platforms have built-in performance management functions, meaning that HR can track the employee life cycle from start to finish (with growth in between).  

The central takeaway is that performance management should not be “one-and-done.” Instead, feedback should exist in perpetuity to allow managers to help employees reach their full productivity potential.