Business Guidance

Why the Annual Review Process is Broken

Ineffective, inaccurate, time consuming, unfair – these words are often associated with the annual performance review cycle. Unfortunately, many companies struggle with these and other glitches caused by conventional performance management strategies.

The first issue is that the conventional method of performance management insinuates that managers only need to speak with their employees about their performance one time per year. The negative consequences of this are endless. With such a time lapse, the employee and the manager often have two glaringly different perspectives of the individual’s performance. If I’m working all year on a project and have received no feedback whatsoever, how am I expected to know I am doing something wrong and that I need to course correct? No news is good news, right?  If an employee walks into their supervisor’s office without having a solid sense of what their review will entail, then the process is broken and you can consider that employee disengaged and, in actuality, set up to fail.

Other common issues include:

Reviews being delayed into the second quarter while managers wait for the strategic business goals from the executives so all goals tie back to the goals of the company.

Weeks or even months are spent calibrating the reviews across the business during this time to better ensure “consistency.”

“Performance Improvement Plans” for those employees not meeting their goals add many meetings to a manager’s calendar that require a significant amount of prep work.

Many annual performance reviews do not truly match the individual’s actual performance because managers don’t accurately track performance throughout the year and are forced to wing it in order to meet a deadline.

Throughout my career I can’t even count the number of times that I have had a supervisor pushing me to terminate an employee for poor performance when the annual reviews in that individuals file showcase someone who is, at a minimum, meeting expectations. But because the supervisor was rushing to meet performance review deadlines, he or she may have been a victim to the Central Tendency Bias where a rater simply rates everyone in the middle.

It is also important to note that when managers and employees don’t have regular performance conversations, it becomes much more difficult to provide negative feedback to employees. Many supervisors simply do not like to deal with conflict and therefore elevate ratings to avoid those negative discussions.

Despite all of these challenges, most companies continue to operate under these conventional performance review methods, but it may be time to rethink that. Need help revamping your performance review process? Contact me at (484) 391-2131 or


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