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Annual Performance Reviews: Pros and Cons

Aug 03, 2021

Annual performance reviews are both helpful and time consuming. Performance reviews can provide a sense of clarity to an employee's job,  provide a way to plan for goals, create open communication, and a roadmap, pinpointing where they are, and developing a plan, to get to a successful destination. However, reviews have been known to create stress and anxiety leading up to, during, and afterward these reviews. In this blog I will be giving both the benefits and disadvantages of annual performance reviews.

No matter which side you fall on about annual reviews it is always important to provide feedback. In such a busy environment as most small businesses are, the offer of feedback is sometimes lagged. However, it is so important to offer as much feedback to your employees as possible and be open to receiving some as well. Providing feedback in a constructive manner is very beneficial for your employees, if an employee does not receive feedback there is a high chance that the employee will leave. This is because if employees do not receive constructive or positive feedback they may feel as though their work is going unnoticed, which could lead to feeling unappreciated. Providing feedback can improve productivity as well as understand how an employee is performing. This idea above all else is extremely important not only for your employees but for the growth of your business as well.  

The benefits of having annual performance reviews be part of one's business, is first being able to have an open conversation with employer and employee. Feeling as though one can have a fully open conversation is very important to how one’s business works. Structured feedback for both employee and employer, provides an opportunity to receive advice on one’s work. An annual review provides a way to create goal setting for not only the employee but also to align with the business as a whole and provide strategic objectives, drive your mission, sales and goals. 

Now the to address disadvantages of having an annual performance review. There are long spans of time between each review which in turn could cause employees to lack in effort for the rest of the year. As mentioned there is an immense amount of stress that comes along with annual reviews, as well as there is a huge time commitment with annual reviews which could include scheduling and setting aside the time to complete the reviews. This could be a challenge for small business owners. An issue that is seen among annual reviews is that only about sixty days are reviewed rather than the whole year, this is due to the fact that most tend to remember more recent events. 

Some considerations for both sides is that there is documentation in employees files which is important as one can see their employees past achievements or challenges, there is also an opportunity for employee development, stress has been seen to increase during the time of these reviews. Peer reviews are a great idea for both employees and employers, these types of reviews offer great feedback from employees that you may work with on a daily basis and have the ability to open up great conversations. 

Whether you decide annual reviews are the best fit for your business or remove them in lieu of regular preferred conversations, the key is providing feedback to your employees.


Disclaimer: HR Branches provides general information about Human Resources. Please note that the information provided, while reliable, is not legal advice. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make sure your legal interpretation and decisions are correct for your location and circumstances. The purpose of this information is for guidance, ideas, and assistance on general HR matters.

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