For decades, the annual performance appraisal has been a staple of corporate life. Every year, employees would prepare for a meeting with their manager to review their performance, discuss achievements, set goals for the future, and, of course, potentially receive a salary increase.
In recent years though, the traditional yearly appraisal seems to be losing its grip.
Employers across many sectors are moving away from this one-time, annual review in favour of more continuous, feedback-driven approaches to performance management.
So, is annual appraisal a thing of the past? Let’s take a closer look at why it’s changing and what this means for employees and employers alike.
The Rise of Continuous Feedback Over Annual Appraisal
The first signs that the yearly appraisal might be on the decline came from employers experimenting with more agile and dynamic feedback systems. Rather than waiting an entire year to provide formal feedback, companies have begun to implement more frequent, less formal check-ins.
This can include monthly or quarterly conversations between managers and employees, or even real-time feedback through digital platforms. The shift to continuous feedback is partly driven by a desire for better alignment between employee performance and organisational goals. In a rapidly changing business environment, waiting 12 months to provide feedback can be far too late. Managers today prefer to give feedback immediately—whether positive reinforcement or constructive criticism—so that employees can make adjustments and improve in real time.
Employers like Adobe and Microsoft have famously moved away from traditional annual performance reviews in favour of more frequent and flexible feedback mechanisms. This reflects a growing trend where businesses recognise the importance of constant dialogue to build a culture of trust, accountability, and agility.
The Downsides of Annual Appraisal
While the annual appraisal system has its merits, it’s not without its challenges. One of the primary criticisms of annual performance reviews is that they can feel like a “one-size-fits-all” approach that doesn’t truly capture the nuances of an employee’s performance over time. An employee may do great work early in the year but get a poor review simply because their manager didn’t observe their contributions during the latter months.
Annual appraisals also tend to be highly subjective, with managers possibly evaluating employees based on biases or limited observations. For example, a manager might focus on an employee’s most recent project or a few standout moments, overlooking an employee’s consistent performance throughout the year. This “recency bias” can result in unfair assessments that do not fully reflect the employee’s efforts or capabilities. There is also a tendency for managers to see annual appraisal as a tick-box exercise, especially if they have lots of direct reports and limited time to gather performance data and prepare adequately.
Furthermore, traditional appraisals often create anxiety for employees, particularly if the review is tied to promotions, raises, or bonuses. The lack of ongoing feedback means that employees may be unsure about how they are performing, leading to surprises during the annual meeting, which can be highly demotivating.
The Benefits of a New Approach
Moving away from annual appraisals isn’t just about eliminating a source of stress. It’s about embracing a more holistic, ongoing approach to performance that fosters growth and development. Some of the key benefits include:
- Clearer Expectations: When feedback is more frequent, it’s easier for employees to understand what is expected of them and where they stand. This can reduce uncertainty and confusion about goals or performance standards.
- Increased Engagement: Regular check-ins allow employees to feel more connected to their managers and the company. They can ask questions, discuss challenges, and share their own insights, leading to greater engagement and satisfaction in their roles.
- Faster Adjustments: In an increasingly fast-paced work environment, the ability to adjust quickly is crucial. Continuous feedback allows employees to address problems and improve performance on a day-to-day basis, rather than waiting for the end-of-year review to get guidance.
- More Personalisation: Frequent feedback can be tailored to the individual, taking into account specific needs, challenges, and aspirations. This allows managers to coach employees in a way that aligns with their unique strengths and areas for growth.
- Focus on Development, Not Just Evaluation: Moving away from a rigid annual appraisal system allows for a stronger emphasis on employee development rather than just evaluation. It shifts the conversation toward learning, growth, and progress—creating a culture where employees feel supported and motivated to improve.
The Role of Technology in Shaping the Future of Performance Management
The increasing reliance on technology has also contributed to the decline of the traditional annual appraisal. Today’s performance management systems often incorporate continuous feedback tools, goal-tracking platforms, and real-time analytics that make it easier to assess and communicate employee performance on a regular basis.
For instance, many companies are using software to collect real-time feedback from peers and managers, set measurable goals, and track progress throughout the year. These platforms allow employees and managers to keep track of achievements, challenges, and development opportunities in a transparent and actionable way.
Technology also allows for a more objective evaluation, reducing the risks of bias and favouritism that can creep into yearly reviews. By tracking specific metrics and using data-driven insights, companies can make more informed decisions about employee performance and growth.
Is There Still a Place for Annual Appraisal?
Despite the growing popularity of continuous feedback and performance management systems, it’s unlikely that yearly appraisals will disappear entirely in the near future. For some organisations, especially those with more traditional corporate cultures or highly regulated industries, annual reviews still play an important role in formalising performance assessments and making critical decisions related to promotions, salaries, and bonuses.
The Future of Performance Reviews
The traditional yearly appraisal may not be entirely obsolete, but its role is certainly evolving. Great employers are increasingly shifting toward continuous, real-time feedback systems that provide employees with more frequent and actionable guidance. This change reflects a broader shift in how employers view performance management—not as a once-a-year evaluation, but as an ongoing process that supports both individual growth and organisational success.
For employees, the move away from yearly appraisals offers the promise of clearer expectations, more personalised coaching, and a more positive work experience. However, for companies, it means investing in the tools, training, and culture needed to make continuous feedback work effectively. The future of performance management will likely be a blend of both formal and informal feedback mechanisms, ensuring that employees are supported, motivated, and empowered to thrive in today’s fast-paced workplace.
So, while the yearly appraisal may not be entirely a thing of the past, it’s clear that its traditional role is evolving—and that’s a good thing for both employees and employers.
Ready to improve how you manage performance? Get in touch to discuss how we can support you
