Performance Review Pushback — Why Some Companies Are Doing Away With Annual Reviews

Joe Weinlick
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In the early 1800s, Robert Owen initiated the process of conducting performance appraisals at his cotton mills. Hundreds of years later, many employers still rely on annual reviews to give raises, award bonuses and promote employees. However, some notable companies are doing away with the idea of annual reviews in favor of other performance-appraisal methods.

Feedback Timing

Feedback from managers should be specific and timely, according to guidelines from the Office of Personnel Management. Managers do give specific feedback during annual reviews, but they may reference incidents that took place months earlier, making the feedback less than timely. Instead of doing annual performance reviews, General Electric managers are now having frequent conversations with their employees. GE also uses an app to help employees and managers share feedback in a timely manner.

Washington Post reporters Lillian Cunningham and Jena McGregor say GE executives are even thinking about getting rid of performance ratings, which is a real departure from the way Jack Welch ran the company in the 1980s and 1990s. GE is known for using a forced ranking system to compare employees to their peers. After using performance ratings to rank employees, GE managers would penalize workers in the bottom 10 percent, even if their performance was good overall. Some workers lost their jobs, while others were denied raises, bonuses or promotions. A full 6 percent of Fortune 500 companies no longer use this type of ranking system, according to research firm CEB.

Time-Consuming Task

Some companies are doing away with annual reviews simply because it takes too much time to do a thorough review for every employee. In a survey conducted by CEB, managers revealed that they spend an average of 210 hours per year on performance-management activities. If managers don't take time to document employee performance issues throughout the year, they must spend additional time digging through their records for the information they need to write accurate reviews.

Employee Perception

Annual performance reviews are not always fair to employees, especially in companies that are struggling financially. When employees receive lower ratings than expected, it is not unusual for some of them to believe the company is just trying to save money on raises and bonuses. The perception that the system is rigged makes it difficult to motivate employees, giving companies yet another reason to do away with annual performance reviews.

Business Results

With managers spending hundreds of hours on performance-management activities, the process of conducting annual reviews should have a positive impact on every business. Unfortunately, that's not the case. CEB research shows that there is no correlation between individual performance ratings and business results. If there is no measurable impact on the company, it doesn't make sense to continue spending so much time on annual reviews.

Adversarial Relationships

Another problem associated with annual reviews is the adversarial relationships that sometimes form between managers and subordinates. Even high-performing employees can become defensive when confronted with evidence of their past mistakes. If a manager isn't careful to balance negative feedback with positive reinforcement, defensive employees may feel less motivated to contribute to the team. When managers give informal feedback on a more frequent basis, employees don't feel ambushed, and they are more likely to act on the feedback in a productive manner.

Streamlined Process

When managers don't have to spend a lot of time writing performance reviews and having long meetings with employees, they are able to give timely feedback and focus on building positive relationships. Checking in on a weekly or monthly basis gives employees an opportunity to improve their performance and correct past mistakes, which often helps increase productivity and keep workers motivated. If managers do not have to fill out all of the paperwork associated with performance reviews, they also have more time for high-value activities.

Just because employers have been conducting performance appraisals for hundreds of years doesn't mean the annual review is a useful tool for modern companies. Instead of making decisions based on a single review, corporate executives and HR professionals are now trying their best to give employees timely feedback, which may result in improved performance and productivity.

Photo Courtesy of Benjamin Rich at


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  • Jacqueline Parks
    Jacqueline Parks

    I think doing away with annual reviews is an excellent idea. Not only are reviews stressful for both individuals involved, I strongly agree that they information provided is not usually timely. I use to be a restaurant manager, and I spent so much time on reviews because they were required, but the feedback that really mattered and improved performance was the regular feedback I gave as problems occurred and strengths were revealed.

  • Nancy Anderson
    Nancy Anderson

    @Jay it's possible that you could talk to your manager about shifting from a yearly to a more informal review. However, it's usually not up to your manager. Most companies have requirements for yearly reviews because they are tied up with yearly bonuses and/or raises. Therefore, your boss has to turn the reviews in and determine who, if anyone, is going to get a raise that year or who gets a promotion. You could probably request an informal review throughout the year but it's probably not going to get you out of the more formal annual review. As I mentioned before, make sure that you are keeping track of your accomplishments throughout the year so that you can bring them up during your performance review. Most people forget about what happened at the beginning of the year and can only remember say the last few months. So keeping a record will help to prompt your manager, also, on things he may have forgotten that need to be included in your review. There's nothing to say that you can't try to make a company-wide policy change by offering this suggestion. But, again, in most companies - annual performance reviews are tied to annual raises and most companies won't do raises throughout the year but do them once a year - usually at the beginning after the reviews are completed. If you try it, let us know it works!

  • Jay Bowyer
    Jay Bowyer

    What advice would you give an employee who wanted to address the possibility of shifting from a yearly to a more informal review scheme with his or her boss? Is there a particularly effective way in which a number of non-unionized workers might band together to suggest a company-wide policy change?

  • Erica  T.
    Erica T.

    I agree that more frequent, casual feedback from management can help employees improve their performance and make them feel like part of the team. I've talked with people, mostly those who work for large companies, about their experiences concerning annual performance reviews - more than a few told me they basically wrote their own reviews, handed the reviews to a manager, had a short conversation about future goals, and then were told if they would receive a raise or not (usually within a week or so). Management had so many people to review at the end of the year, they simply didn't have the time to sift through employee records or talk with team leaders to get a clear idea of how employees were performing.

  • Duncan  Maranga
    Duncan Maranga

    I concur with the idea of feedback timing such that information concerning work progress and emergent issues gets to the managers at the very moment it happens. This is because waiting for the end of the the year to carry out a conclusive review will be time wasting and may lack accuracy of information, especially when referring to events that happened during the earlier months of the year.

  • Jane H.
    Jane H.

    While I agree that doing away with annual reviews is a good idea, I disagree with the idea of simply replacing them with more frequent reviews. This feels like micromanaging to me. I'm in a situation where I get immediate feedback on each project as they are completed. I prefer the dynamic of that approach to any kind of scheduled report.

  • Nancy Anderson
    Nancy Anderson

    Annual reviews certainly come with a lot of stress and fear. But they don't need to. You know how you have done all year. You have kept a living document to show your work and progress and you are ready to talk with your manager. Certainly daily, casual feedback is good but most managers don't normally have the time to do that. @Erin performance reviews don't always end with a raise. For instance my last review was stellar but I didn't get a raise. I just continue to maintain or improve my performance in hopes that next year will be different. Performance appraisals and raises used to go hand-in-hand but that practice stopped several years ago. At least that's what I see. Anyone else want to chime in?

  • Erin H.
    Erin H.

    Doesn't an annual review usually come with a performance raise? I think that it does make more sense to give employees feedback regularly, but not at the expense of overlooking monetary advancement. Some companies who move into this model lose the goodwill of employees who have come to count on yearly bonuses and raises. Disney did this years ago and it really affected morale.

  • Shannon Philpott
    Shannon Philpott

    I agree that annual reviews have become outdated and cumbersome for managers. Checking in with employees frequently and casually while also offering feedback in a private, online app or program is much more productive and beneficial for both employees and managers. I think that this practice also reduces the stress and fear associated with annual reviews. As an employee, I have always noticed that annual reviews create uncertainty and fear that negatively affects morale.

  • Nancy Anderson
    Nancy Anderson

    @Jacob not sure how to answer that. Every company I have worked for used the annual performance reviews for raises and promotions. If neither of those are tied to your performance then it probably is just a waste of time for both you and the manager. Annual reviews should be the time to bring up issues - to discuss both positive and negatives of both your performance and issues surrounding your work area. Maybe companies use it for that - to correct deficiencies within work areas based upon the feedback they get an the annual review? Just guessing here. Anyone else have experience working for a company like this?

  • Jacob T.
    Jacob T.

    What is the purpose of an annual review in a corporate structure were raises and bonuses are not an option? I've worked in places with a contract pay scale and commission based jobs where we were all still subjected to an excruciating hour sitting with an inarticulate front line manager going over a numbers based review, grading our performances from 1 to 5. If it doesn't impact wages and isn't timely, how does that benefit the company or the employee?

  • Nancy Anderson
    Nancy Anderson

    @William I totally agree. If I am doing something wrong, tell me now so that I can correct it. I think that performance reviews are a bit outdated too. But we have to remember the reason for the annual reviews - for promotions and raises. Without the review it might be hard for the manager to plead your case and get you that promotion or raise.

  • William Browning
    William Browning

    I would much rather have constant feedback so I can improve my work as soon as possible rather than find out at a performance review that I had been doing something wrong for nine months. Performance reviews seem so outdated in today's social media world, and there's nothing wrong with instant feedback to keep employees in the know.

  • Lydia K.
    Lydia K.

    I've worked for companies that did not have annual reviews for several of the reasons listed in the article. One of the issues is time. In smaller companies, managers don't have the time to dedicate to reviews. Also if an employee isn't performing to standard, it makes more sense to let them know right away. It doesn't seem cost effective to let an employee underperform all year and then let the person know they won't be getting a raise for issues they could have remedied months prior to the review if they knew about them.

  • Abbey Boyd
    Abbey Boyd

    Overall, I do like the idea of getting rid of the annual performance review in exchange for more regular and timely feedback. I disagree, though, that an adversarial relationship should be a factor in doing away with the process. Supervisors must give feedback, both positive and negative, when a situation warrants. I don't believe that there is any less likelihood of this adversarial feeling with more frequent feedback. Employees just have to remember that getting negative feedback will just help them grow in the future.

  • Mike Van de Water
    Mike Van de Water

    It seems like many of the issues here arise because managers are simply overseeing too many employees and don't have time to give the proper feedback for each individual on a timely basis. Do you have any guidelines for how many employees a manager should realistically be able to handle before you run into this problem? What sort of technological options are there that might be able to increase this number? (maybe an easy-to-use employee records app or program?)

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