Employee Reviews: 5 Reasons to Rethink Annual Performance Reviews 

Redesign your annual employee reviews and give your employees a transforming performance review based on our tips.

July 24, 2020 By Sara Ana Cemazar Share on Twitter! Share on Facebook! Share on LinkedIn!
employee feedback
annual employee review

Annual performance reviews are an outdated way of performing employee reviews. Although they are still a present form of feedback in companies – sometimes even the only one – it is time for you to give your employees a better performance review experience. 

Why? Well, for one, because employees said it themselves. 65% of employees say they want more feedback to get a better sense of their performance. In this article, you will learn all the benefits of employee reviews, why annual performance evaluations need to be redesigned, and how to deliver great review that will positively impact your employees’ work performance. 

🔍 Before we start, learn how to give meaningful feedback to your employees and see their performance improve. 

Why Should You Review Your Employees’ Work 

Performance reviews are essential to your employees’ work. Without them, employees are left to conclude for themselves if their work is satisfactory and in which areas they could improve. As you can imagine, this decreases employee motivation and has a potential of diminishing employee morale. 

Your employees need guidance in order to accomplish their goals, and they need reviews to get a better sense of their performance. Here are more reasons why you should review your employees’ work. 

Improved employee engagement 

Employee engagement is not only an HR buzzword – it is also a key element in improving business outcomes such as customer ratings, profitability and work quality. At the same time, employee disengagement is very costly for businesses, with $500 billion lost due to it on annual basis in the US. 

Employee reviews have the power to stimulate employee engagement: in fact, 43% of highly engaged employees receive reviews at least once per week.

employee reviews

Higher employee productivity 

Another benefit of evaluating your employees’ work is improving their productivity. When they receive timely performance reviews, employees are motivated to work harder and better. It is especially beneficial to give positive feedback to your employees, as teams with managers who receive strengths feedback show 12.5% greater productivity. 

Reduced employee turnover 

Gallup found that organizations in which employees received strengths feedback had 14.9% lower turnover rates than organizations in which employees did not receive feedback. This is a direct and measurable advantage of performance evaluations that speaks volumes to HR Professionals whose frequent KPI is to decrease employee turnover rates. 

annual employee reviews

Innovation and creativity in the workplace 

Innovation thrives in workplaces where employees are self-confident, take ownership over their work and are motivated to contribute even more. As you can imagine, regular employee reviews are crucial to facilitate this kind of mindset and create an atmosphere of open dialogue in which employees feel free to present their ideas and discuss them. 

Improved company culture 

Although company culture depends on many elements, performance reviews are one of the staples of positive company culture. Open communication, employee appreciation and regular employee evaluations go hand-in-hand with inspiring company culture, improved performance and better business results. 

In fact, McKinsey’s research shows 25% higher productivity at companies that support feedback, build trust and transparent corporate communication.  

The Negative Sides of Annual Employee Reviews 

As mentioned before, annual employee reviews are still present in many companies as the only form of employee evaluations. However, they are an out-of-date form of performance reviews that must be upgraded if companies want to decrease turnover, improve productivity and enable their employees’ success. 

These are the reasons why you should rethink your annual performance review practices. 

1. Timeliness 

Annual employee evaluations happen once per year. In a world where 49% of Millennials, who now comprise more than a half of world’s workforce, expect to stay at a job for 2 years – performance reviews must happen much more often. 

millennials in the workplace

One of the most important lessons on feedback that has been around is to make it not only more frequent, but continuous. In that sense, employee reviews must never stop happening – they should take an ongoing form that corrects and encourages certain actions as they happen. 

2. Oversimplified 

When you perform annual employee reviews, you grade your employees’ execution of tasks and work efficiency on a previously set scale. You can probably agree that these numerical indicators cannot account for the full scope of your employees’ work impact or behaviors and actions that have intangible effects for a workplace. 

As a matter of fact, 77% of HR executives believe performance reviews are not an accurate representation of employee performanceTherefore, the oversimplified measurement of your employees’ work on annual basis fails to quantify everything your employees actually did and gives you an incomplete view of your employees performance. 

3. Unactionable 

Because they occur once a year, even the best employee reviews are not enough motivating to keep your employees’ engagement levels high. At the same time, correcting behavior or actions that happened six or ten months ago is somewhat futile. 

In order to give re-directive feedback, it needs to be immediate in order to embed the learning process with a certain action. In that sense, annual employee reviews both fail in enabling learning for your employees and do not motivate them for long enough. 

4. Stressful 

It is exhausting for managers to give comprehensive and high-quality annual evaluations, not to mention stressful. Nobody likes to be critical of others. In fact, 37% of managers say they are uncomfortable giving feedback to their employees. The expectation of annual employee reviews are too high considering its many drawbacks, but managers still feel the discomfort in delivering them and worry if they will meet the goals. 

stressful employee reviews

On the other hand, it is stressful for employees to wait for a whole year to get a sense of their performance. In case your employees thought they were doing better than your evaluation shows, you have missed the opportunity to optimize your employees’ work – and it’s probably overdue. If your employees’ impression is that they did worse than thought, then you have failed to recognize your employees work on time. 

🔍 Learn all about different management styles that will allow your managers to adjust their organizational methods to their teams and see them thrive. 

5. Limited agility 

Because of all the reasons we mentionedannual performance reviews leave no space for agility and fast-paced changes that should happen on the go. Workplace agility is about the ability to work quickly, cohesively and seamlessly. It is also about enabling your employees to do their best work in a changed environment. 

For example, as remote work is more present than ever and your employees are physically apart, they need immediate evaluation of their work in order to be productive and collaborate efficiently. 

Better Ways to Review Your Employees’ Work 

As we listed all the reasons why annual employee reviews are inadequate way of evaluating your employees’ work in contemporary workplaces, it is time to take a look at better ways of reviewing your employees work. These are some of the research-backed best practices on constructive and re-directive reviews that will also provide excellent employee experience to your workforce. 

On-the-spot feedback 

Instead of long, oversimplified and infrequent annual performance reviews, it is better to give and receive on-the-spot feedback from managers and peers. That way, employees are learning on the go and can correct their mistakes more effectively and with long-lasting effect. 

Moreover, employees themselves recognize the value of frequent feedback. 80% of Gen Y employees say they prefer on-the-spot feedback over formal reviews. 

informal employee reviews

Employee recognition 

As you probably know, employee recognition has multiple benefits for your workforce and for your organization. One of the most immediate effects it brings is encouragement of positive actions and behaviors. By appreciating those actions, they are reinforced – your employees are now aware they did something good and they will be looking to repeat that kind of behavior in the future. 

🔍 Find out what are the best employee recognition practices and how to implement an Employee Recognition program in your company. 

employee recognition playbook

Peer-to-peer feedback 

Even though some individuals may feel uneasy about it, peer-to-peer feedback is actually desired among employees. According to research, 76% of employees are motivated by positive feedback from their peers. 

Facilitating peer-to-peer feedback is sometimes hard if you do not have the right tools for it, or if your current company culture simply is not conducive for it. Take a look at how peer-to-peer feedback helped to drive company success at Hatch, which implemented Semos Cloud’s solution FeedBck. 

Make positive evaluations 

Although this does not necessarily come as a surprise, many mistake feedback with exclusively negative reviews. Performance reviews can also be positive, and research actually shows that ideal ratio of positive to negative feedback is 5:1. That means that for every negative remark you make, you should ideally share five positive remarks, too. 

positive employee feedback ratio

Continuous employee reviews 

It cannot be stressed enough: the most important lesson on employee reviews is to give them not only more regularly than once per year, but to make them continuous. It is a comprehensive task, of course – you must think of adjusting company culture to being open and accepting of receiving and giving unsolicited feedback, you must apply the right tools and you should teach your employees on how to give constructive evaluation. 

However, employees are simply asking for it! 57% of employees say they prefer corrective feedback over praise, and 92% agree that negative feedback, when delivered correctly, is an effective way to improve performance. Therefore, act upon these useful statistics and allow your employees to grow, learn and drive your company’s success! 

continuous employee reviews

Employee Reviews Best Practices 

Employee reviews have the power to transform your employees’ work performance and thus improve their productivity and company’s business success. However, there are some important steps to follow in order to deliver the transforming, constructive review that your employees are looking for. 

Here are some of the best practices for conducting employee reviews. 

Evaluate according to goals  

It is important that you set the goals your employees are supposed to achieve and evaluate their performance according to those. That way, both you and your employees will have a point of reference when talking about work performance. 

🔍 Use these editable employee evaluation forms to keep track of your employees’ goals. 

Focus on the positive 

As mentioned earlier, research shows that the ratio of positive to negative feedback is as high as 5:1 in highly productive teams. Therefore, you should focus on the positive aspects of your employees’ work and deliver the negative feedback with care and suggestions on how to improve. Be careful to use appropriate language and ask your employees how you can help them advance. 

Make it a two-way conversation 

There is nothing worse than an outdated approach where employees just sit and listen while managers do all the talking. Instead, make it a conversation: ask your employees what troubles them, what could help them perform better, what you personally can do to facilitate a more productive environment etc. Show that your employees’ voice matters! 

Explain the impact of employees’ work 

Employees want to know how their work fits into the larger picture of company’s success, and it is a valid question. Younger generations are especially keen on finding jobs that are meaningful, with 50% willing to take a pay cut in order to do more meaningful work. 

Make it less formal 

This particular advice goes hand in hand with making the feedback continuous. You do not necessarily have to throw the sit-down evaluations out of the picture, but you should definitely make employee reviews less formal. This means that short verbal or written feedback messages are more than welcome in the workplace and have the power to encourage positive behavior or correct wrong one by learning on the go. 

Finish with a set of action points 

Conclude your employee reviews on a strong note and eliminate the possibility of confusion among your employees. You can come up with a set of action points together so you both know what tasks should follow the review itself. 

employee performance reviews

28 Useful Performance Review Phrases 

Since it is hard to come up with the right words for your employees’ performance, we created a list of useful performance review phrases. They are categorized by areas of skills or goals according to which you evaluate your employees’ performance. Also, you will find them ranging from “negative” or constructive criticism to overwhelmingly positive. 

We hope these performance review phrases help you give your employees the feedback experience they want and deserve. 

Communication skills 

  • [Employee name] keeps his/her coworkers up to date with project deadlines, but could enhance communication skills to keep meetings oriented according to schedule 
  • [Employee name] enforces company policies without any negative consequences  
  • [Employee name] effectively communicates expectations and project updates 
  • [Employee name] communicates effectively and clearly with peers, subordinates and executives. Her/his presentation skills are excellent 


  • [Employee name] could work better to adjust her/his schedule to coordinate with other team members 
  • [Employee name] adapts to changes in work policies and procedures effectively 
  • [Employee name] willingly adapts to workplace changes and schedule to attain group goals 
  • [Employee name] response to challenging situations surpasses the expectations and he/she makes provisions to accommodate everyone’s schedule and joint goals 

Responsibility and ownership 

  • [Employee name] could try solving minor issues more independently 
  • [Employee name] seeks help when he/she needs it and takes responsibility for his/her work 
  • [Employee name] shows responsibility for his/her projects and successfully coordinates other team members to work on it 
  • [Employee name] takes responsibility over projects and pushes beyond expectations to deliver high-quality product 

Collaboration skills 

  • [Employee name] could collaborate more openly with colleagues and keep them updated on project status better 
  • [Employee name] collaborates with her/his coworkers efficiently 
  • [Employee name] conducts seamless collaboration with colleagues 
  • [Employee name] exceeds expectations regarding collaboration, selflessly shares knowledge and proactively asks to contribute to joint projects 

Innovation and creativity 

  • I would love to see more ideas from [employee name], as I know he/she could apply creative thinking to implement company’s vision to projects 
  • [Employee name] sometimes suggests new ideas in meetings and on projects 
  • [Employee name] continuously delivers innovative suggestions 
  • [Employee name] shows initiative to develop new ways of thinking to improve existing processes or projects within company 


  • It would be great if [employee name] could narrow down his/her focus on fewer projects for goals to be attainable 
  • [Employee name] contributes in satisfactory manner to overall performance of his/her team and department 
  • [Employee name] continuously strives to improve his/her performance, productivity and to exceed targets 
  • [Employee name] shows excellent time-management and organizational skills and exceeds expectations for delivering his/her work 

Time management 

  • I noticed [employee name] missed a couple of early morning meetings lately. I’m afraid he/she might have missed some important information in those. We should work out a plan together to resolve this issue. 
  • [Employee name] manages his/her time efficiently most of the time. A minimal improvement would lead to excellent efficiency 
  • [Employee name] has good attendance track and doesn’t violate the standard attendance policy 
  • [Employee name] exceeds expectations with his/her punctuality and delivering tasks and projects on time