Annual Reviews Suck. What to Do Instead.

I've always found annual reviews to be uncomfortable, stressful, and unhelpful, whether as a manager delivering reviews or as a direct report receiving one.

Don’t just take my word for it—let’s look at some data:

• 95% of managers are dissatisfied with how companies conduct performance reviews. (1)
• 90% of HR leaders say the process fails to yield accurate information. (1)
• A McKinsey study found most CEOs don’t think appraisals effectively identify top performers. (2)
• Gallup discovered only 1 in 5 employees feels motivated by their company’s performance practices. (2)

Yet, here we are, slogging through annual reviews once again.

Managers spend an average of 200 hours per year on performance review activities. (1)

And for what?

In my opinion, annual reviews aren’t really about performance—they’re about budgeting and staffing. They determine raises, promotions, and, in the worst cases, justify cutting costs by unfairly citing low performance.

Sure, discussions about goals and development plans are part of the process. This, I do feel is quite valuable.

But relying on once-a-year feedback is wildly insufficient. Why? Because people—and the world around them—change constantly. Motivations shift. Teams, tools, and technologies evolve. Goals can quickly become irrelevant in the face of new challenges or opportunities.

It’s no surprise that over 50% of employees feel their managers didn’t “get their performance review right.” (2)

What to Do Instead

Give feedback frequently and regularly.

When done thoughtfully, feedback is a gift. It reinforces what’s working, addresses gaps early, and ensures alignment before things go off track.

While not a fully exhaustive list, here are 7 tips for making feedback more effective:

1. Have goals. You can't give feedback unless you have specific, measurable, and actionable goals that are reasonable. It's best for the manager and employee to craft the goals together.
2. Feedback once a year isn’t enough. Aim for monthly conversations at a minimum. Regular check-ins allow you to adjust goals and plans in real time based on current priorities.
3. Be specific with feedback. Vague feedback doesn’t help anyone improve.
4. Celebrate the wins. It’s easy to zero in on mistakes, but recognizing successes motivates people to keep delivering great results.
5. Collaborate on action plans. For corrective feedback, work with your employee to identify root causes and set realistic, achievable goals.
6. Document “just enough.” Keep records simple and focused on key takeaways. Documentation should guide conversations regarding both progress made and next steps, not feel like a punishment or death march.
7. Make feedback a two-way street. Encourage your employees to share feedback with you. Strong working relationships are built on mutual trust and open communication.

Overall, if you're missing any one of these tips, either as a manager or employee, I encourage an open conversation in how you can work together for more meaningful feedback so that you can have higher impact performance.

The Bottom Line

Feedback should never be a surprise—especially during an annual review. Frequent, thoughtful feedback helps employees grow and keeps your team aligned. Let’s ditch the outdated once-a-year approach and embrace a culture of continuous improvement.

Want more?

Connect with me! Dr. Steve Martin

Check out my book: Bad Sh!t Managers Do: How to Lead Instead

Sources:

(1) Weinstein, M. (2016). Annual review under review. Training, 53(4), 22–28.

(2) Cespedes, F. (2022, July 8). How to conduct a great performance review. Harvard Business Review. https://hbr.org/2022/07/how-to-conduct-a-great-performance-review