performance review

The annual performance review: Indispensable implement or dated distraction?

Managing your teams effectively is a fundamental part of attracting and retaining top talent. The annual review has been a mainstay of management for many years, but there are those that suggest that the process has become a bit of a pointless, outdated fandango, generating endless reports that are never read, poorly suited to modern ways of working and a long way from best practice. Is it time to reappraise the annual appraisal? 

Annual performance reviews are an invaluable tool for a business and the individual to gauge development, reaffirm commitments and have an open discussion with line managers about goals and aspirations.

Without an annual review, people may not know how they are progressing; they are trying to do their best without knowing what the boss or leadership team thinks, without a formal feedback process they can feel that they are being left to flounder.

Annual reviews give effective human resources and senior leadership teams the opportunity to spot potential, highlight wasted talent or begin the process of managing out problem team members. They are a fundamental part of good management.


Annual performance reviews are one of the greatest wasters of time in a modern business environment; they distract people from client facing work and focus attention on projects that stopped being relevant months ago.

Annual reviews encourage people to play a game with their leadership teams rather than focus on improving themselves and adding value to the business throughout the year. Managers sometimes abuse the process and play favourites.

Annual reviews generate a massive number of turgid reports that are unlikely to be read by line managers let alone human resource teams, and are simply there to cover people’s backs in case anyone ever needs to be taken down a disciplinary path in the future. In the era of social media and instant gratification, they are an unnecessarily slow reaction to activities that might have been completed over a year before.

There’s truth on both sides

Like most things in life, the truth lies somewhere in the middle. Individuals and line managers need to have regular discussions and personal chemistry can sometimes stand in the way of that being a regular, organic process.

Equally, human resources and senior leadership teams need to keep a watchful eye on the progress of teams and the people within them, so there needs to be a formal element to certain meetings to ensure that everybody gets a true picture of strengths and weaknesses. Minor niggles need to be discussed in an open, structured forum before they have the potential to fester into something more serious that runs the risk of destabilising a team.

At the same time however, any line manager worth their salt should inherently have a fairly good feel for how their team members are progressing and have the confidence to engage human resources teams well before a challenge develops into a problem.

In a fast-moving world where personnel and structures change rapidly, the paper-trail that is associated with a well-implemented annual performance management process can be exceptionally helpful to an incoming leader, helping them recognise potential, as well as potential problems, before they take the helm of an existing team.

The flip side of this argument is that in reality, most incoming leaders prefer to make up their own minds about the strengths and weaknesses of their new teams. An outgoing manager’s assessment of how an individual is performing can be quite subjective and reliant on there being professional chemistry between leader and individual. While we’d like all handovers to be planned and properly managed well in advance, many are forced on a business and in that situation there isn’t time to wade through a swathe of several-month old reports that may not really reflect realities on the ground.

Busy doing something

Annual reviews have often been associated with project work, which is intended to complement the day-to-day role. Projects are often seen as an opportunity to develop improvements to working practices, and expose individuals to wider parts of the business that could enhance careers in the longer term.

There’s little doubt that some people need additional projects to keep them engaged and fire their ambitions. Making sure that projects maintain their forward momentum is a useful part of the annual performance review. Without it a project can wander off in its own direction and ultimately fail to deliver its intended purpose.

In reality however, the life-cycle of a project varies significantly. Some can be completed in two weeks while others take far longer than a year to implement. Trying to assess the impact and effectiveness of both long and short term projects within the same performance management structure is unlikely to be truly effective. It is more likely to lead to the creation of work for work’s sake than the delivery of something that makes a meaningful contribution to the efficiency of the workplace. This is particularly true where the performance appraisal has a specific, mandated number of projects that need to be assigned to an individual.

Annual reviews, fax machines and CRT monitors

As we have discussed a number of times in this blog, rewards are most effective if they are delivered within seven days of the behaviour that you are trying to encourage. That being the case, waiting for the completion of an annual review process to deliver a reward may be a less effective way of encouraging positive behaviour.

Related to this, technology has also evolved massively over the last decade. Team data is no longer confined to discreet and often incompatible spreadsheets stored in dusty corners of a manager’s hard drive. It is now far easier to create and maintain a companywide, rolling assessment programme that rewards positive behaviour quickly and consistently.

There are now a string of effective tools available to individuals, managers, HR professionals and senior leadership that can offer continuous performance assessment, feedback and employee recognition. Hosted on a company intranet or even the internet, these tools remove the need for files to be formally submitted in a lump, making rolling assessments far more feasible and giving HR departments and management teams a genuine opportunity to spot outliers and potential problems developing.

In the past, if line managers wanted to get feedback on the informal links that have developed between teams, they would need to take time out of their day and sit down with their opposite numbers in the department on the floor below. It is now far easier for all parts of the business to formally but quickly add their input to colleagues’ rolling assessments. It’s an approach that saves time, reduces stress, improves morale and brings down business costs.

Late nights in the office racking your brains and searching your sent mailbox for three pieces of evidence that your positive contribution to a project that was completed months ago really should be a thing of the past.