Building a Meaningful Annual Review Process

The annual review often creates anxieties for all involved. Managers, employees and (depending upon the size of your organization) the Human Resources department all have a stake in the process. While the original intent of an annual review has great merit, many unintended consequences may result when poorly implemented. When the subject of the annual review comes up, many thoughts may come to mind: From the employee's perspective, the annual review:

  • Is a necessary evil required to obtain their salary increase
  • Causes anxiousness, even dread
  • Forces them to check notes, calendars, and memos in an attempt to recall major events from the past year that might come up during the review
  • Be prepared to blow their own horn -- even if it is not their nature
  • Be prepared to defend their performance
From the manager's perspective, the annual review:

  • Is a necessary evil to satisfy the requirements of the job and to keep HR off their back
  • Causes stress - with the day to day demands of managing the business, it's difficult to find the time to complete the annual reviews
  • Creates an opportunity to let the employee know how the manager feels about the job they've been doing. It may also force the a manager to confront poor performance
  • Creates an opportunity to set mutually understood goals for the coming year
It is important to ensure the original intended purpose of the review is achieved regardless of the specific mechanism employed by your organization. These purposes include a clear understanding of job performance expectations, a mutual understanding of how those expectations are being met, and clear goals going forward - including plans necessary to achieve those goals. Here are several suggestions for your annual employee review process (adapt them to the unique needs of your organization):

  • Reviews should occur continually as business events transpire-not simply during a randomly selected annual date. Consider quarterly reviews which ultimately can be rolled up to annual review.
  • Try to minimize the air of formality in any review meeting. The best results occur when both parties are relaxed and able to communicate constructively.
  • The review process should involve two way communication.
  • There should be no surprises. Quarterly reviews help in this regard, as does the leadership practice of confronting performance issues as they occur (see David's article).
  • If the employee's perception and the manager's perception are very far apart, communication issues are indicated-it could be either party or both.
  • Give the employee feedback on how their performance is helping the group achieve its goals.
  • Clarify for them how their performance compares to others in the group.
  • Motivate them to continue to improve their performance.
Instead of being dreaded, the review process should be a positive experience and a powerful tool to maximize employee performance and overall business results.


Glenn Parsons, managing director of SKYE Business Solutions, is a seasoned executive with a unique blend of entrepreneurial/start up and public company experience. His background and insight positions him well as a trusted advisor and valuable asset to many organizations across several different industries. With a strong legacy of executive sales leadership in venture backed technology firms, his ability to help identify and solve both strategic and tactical issues is demonstrated repeatedly....

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