For decades, annual reviews have been the cornerstone of corporate life. Once a year, managers and employees sit down for a formal chat to discuss past achievements, problems, and future goals.  In theory, it’s a time for honest feedback, a chance to talk about career development and alignment with company objectives.  In practice, it’s often a dreaded, box-ticking ritual that leaves both sides frustrated.

Post-COVID things changed rapidly, with teams more dispersed and a shift in employee expectations. Annual reviews are facing the chop, with huge companies like  Adobe, Deloitte, and Microsoft having already scrapped them, replacing them with more fluid systems. Many other organisations are following suit.

The question is: if the annual review is dying, or already dead, what’s next? Anthony Sutton, Managing Director of Cream HR, explores what tools and actions business owners can take to replace the annual review in an impactful and beneficial way.

If you think about it, annual reviews have always been a questionable use of time. If you have a leaking pipe, you don’t wait for a year to fix it. Why would you wait a year to speak with one of your team? Also, how can you be sure that you can remember something that might be important to them that happened 12 months ago? 

The annual review was designed for a workplace that no longer exists. In the mid-20th century, work was more predictable, careers were linear, and hierarchies were rigid. Measuring performance once a year made sense when job roles and business environments evolved slowly.

But in today’s economy, waiting 12 months to give formal feedback just isn’t productive. Problems fester, achievements go unrecognised, and the link between action and feedback weakens.

Key issues with the traditional annual review include:

Delayed Feedback

Humans learn best when feedback is immediate. Telling someone in December about a mistake they made in March is not only unhelpful, it can feel like vindictive punishment rather than constructive criticism.

Bias and Memory Gaps

Annual reviews often rely on a manager’s recollection of an entire year’s work, which is inevitably selective. Recency bias, overweighting the last few months, is a common distortion.

Stress and Formality

The high-stakes nature of an annual review can cause anxiety for employees and managers alike. Instead of an ongoing conversation, it becomes a judgment day.

Administrative Burden
For HR teams, compiling ratings, rankings, and lengthy written reviews consumes weeks of effort that could be better spent on development initiatives.

Anthony says, “The slow demise of the annual review doesn’t mean abandoning performance conversations, far from it, they are  an important part of the development of your team and business, but I feel that business owners should be moving towards a form of continuous performance management which prioritise frequent, lightweight check-ins over once-a-year evaluations.”But what does continuous performance management look like in practice?

Weekly or bi-weekly one-on-ones between managers and employees.

Real-time feedback tools that allow peers and leaders to give quick recognition or constructive notes.

Quarterly goal-setting rather than annual objectives, so targets can adapt to changing business priorities.

Lightweight documentation – short summaries rather than exhaustive narratives.

The emphasis is on conversation, not evaluation. Instead of stockpiling feedback, managers deliver it in the moment.

Continuous performance management is only the beginning. The next step is about facilitating growth by integrating performance, engagement, and development into a single, ongoing process. 

Four trends that Anthony believes shape the post-annual-review era include coaching over judging.  In the past, the manager was seen as a judge, whereas the focus should be on coaching staff, so less of “this is how you scored” and more of “how we help you get to the next level.”

Anthony explains how managers can become more coach than judge: “It’s about communication.  Ask open questions, encourage employees to identify their areas for improvement, and work together on development plans rather than dictating what the plan will be.  This will increase engagement and, in turn, success.”

He also advised that while people may have access to lots of data, managers should be using data to inform, not drive.  For example, you might be able to see somebody’s sales, but it will be the conversation around the figures that will give more context.  Take time to discuss what might have affected sales, whether it’s the market, personal challenges, or something else.  Remember you’re dealing with individuals, not numbers.

Another thing more companies would benefit from is peer-to-peer feedback.  Some of the most valuable insights come from colleagues who work side-by-side day to day.  This approach flattens the hierarchy of performance conversations and reduces the bottleneck of everything having to go through a single manager.

Finally, conversations around performance often fail because they have no connection to the employee’s long-term ambitions. Managers could help employees by looking at career development in the performance process, by mapping with the employee the skills needed to achieve future goals, and linking feedback directly to those skills, as well as providing tailored resources and opportunities to help on projects that enhance the skills needed to progress.

To just kill off the annual review may sound easy on paper, but it will take time, as it requires a cultural shift, moving away from a compliance mindset to a growth mindset.  This will mean training managers, normalising seeing feedback as a positive and a chance to grow rather than a criticism, and rewarding coaching, not just results.  It’s also vital to understand what employees want.  Research consistently shows that employees,  especially younger generations, crave more frequent feedback and recognition. According to Gallup, employees who receive weekly feedback are five times as likely to be engaged at work. But it isn’t just frequency that matters; they also want clarity on expectations and goals, fairness in evaluation processes, actionable feedback that leads to growth and recognition for contributions, both big and small.

Annual reviews aren’t just dying; they’re evolving into something better. The challenge for leaders is to design systems and cultures where performance conversations happen naturally, frequently, and with a shared goal: helping people do their best work every day.