8 Pros and Cons of Annual Performance Appraisals

Employees need to have feedback in order to improve on their performance. If managers aren’t providing them with this feedback, then there really isn’t any way for an employee to truly grow. An annual performance appraisal is one of the most common methods of providing this feedback in a way that is meaningful. As an extra benefit, many pay raises are tied to these appraisals. Here are the pros and cons of annual performance appraisals to consider when deciding if this is the right feedback to be providing.

Here Are the Pros of Annual Performance Appraisals

1. It’s a chance to have a thorough overview of how an employee is doing.
Many annual performance appraisals are documents with multiple pages of specific feedback. The attempt of the appraisal is to give the employee a thorough overview of their strengths while pointing out certain weaknesses that may need to get shored up. This allows the supervisor and the employee to get on the same page with each other.

2. It’s a chance to set goals for the upcoming year.
The best annual performance appraisals will do more than just provide some feedback. They’ll also allow the supervisor and the employee to set some specific goals for the upcoming year. This could be anything from the chance to pursue a promotion to the opportunity to cross-train in other positions. By setting clear, specific goals, the company can work to make sure that their best people will want to stick around for another year.

3. It’s a chance to be able to make adjustments in a non-threatening way.
When a supervisor confronts an employee on a negative behavior, it usually results in a spiral of negativity that can completely demoralize an entire team – even if that confrontation is entirely justified. By putting these words on paper instead of a conversation, the feedback is accepted more often and employees will work to make changes instead of feeling defensive.

4. It’s a way to document the long-term improvements that an employee is making.
Employees that have been around for 5, 10, or even 20 years tend to settle into a general routine of being a go-to person for advice. It can be easy to forget the growth these long-term employees experienced. New managers who come in may not even know about this growth. Documenting the appraisals is a way to track meaningful progress.

Here Are the Cons of Annual Performance Appraisals

1. It is virtually impossible to cover an entire year’s worth of work on one document.
Employees complete a lot of work every day that an annual performance appraisal just isn’t going to be able to capture. What you’re getting on this document is the 30 second highlight package of their year and nothing more. Defining an employee by certain defining moments, especially when they feel different moments that should be highlighted, can be very demoralizing.

2. Annual performance reviews are more like “the last 2 months maybe” reviews.
If an employee is consistently good with their performance, but makes an error within the last 60 days before the completion of their annual performance review, what typically stands out? It isn’t the consistency. Negative actions or poor decisions tend to be the focus of this kind of review and it is usually what has just happened that gets noticed. This means it really isn’t a complete annual review.

3. There’s a good chance an employee’s manager hates completing performance appraisals.
The modern performance appraisal is designed more to combat a manager’s laziness instead of being designed as a tool to provide a complete review. Some reviews don’t even include a “3” on a “1-5 scale” because of a manager’s tendency to just circle the “average” icon. If a manger hates filling out this paperwork, then the feedback is essentially just a waste of time, energy, and paperwork.

4. Many employees don’t even receive this feedback.
If an employee leaves before the end of an annual cycle, then they will likely have received zero feedback about their performance. If they did, it was likely because the did something wrong and received a verbal reprimand of some sort. This lack of feedback is often considered a lack of caring by the employee and can be one of the causes that force good people to seek out a new job.

The pros and cons of annual performance reviews show that they can be beneficial, but they must be complete to accomplish this. If an annual review reflects only recent accomplishments or attitudes, then it fails to meet its goals. When this happens, all of the information will turn into useless white noise that no one will care about.