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How Annual Performance Reviews Impact the Business

Say the words annual performance review in a workplace and you’ll be met with groans of frustration, stress, and perhaps even some anxiety regarding work bonuses. These performance reviews are the bane fo every employee and manager’s existence. It means criticism and possibly hash feedback for employees and a ton of paperwork for managers. Annual performance reviews used to be an integral part of the performance management system but, over time, have become redundant. Its slowly fading out from all companies and is being replaced with ongoing feedback and continuous review and analysis. Let’s look at its evolution and how it impacts a business. Evolution of Performance Management System Initially, before there was anything like an LMS or even before computers, companies realized that reviewing the performance of employees was important. They had to make sure that employees were meeting their targets. Employees were appraised annually and were reprimanded for their mistakes. This wasn’t a productive method because employees couldn’t fix all mistakes after simply being told about them, they needed guidance so managers were put in charge of them, who along with the annual review report provided guidance and positive feedback as well. It was a better system than before but still not efficient, managers many times, played favorites and there was nepotism present too. When technical advancements happened, an LMS took over which made this task much easier and managers weren’t burdened with all the paperwork. In the past few years, companies realized that while annual performance review had its benefits, I wasn’t an efficient system. Employees were progressing as they should and work would slow down during the time in which these reviews took place. Annual performance reviews were then replaced with 360-feedback and continuous advice, guidance, and analysis by managers. This was taken a step further when organizations placed emphasis on interactions and encouraged employees to learn and seek help from each other and other departments as well as provide feedback on how the organization could improve.