The Pros and Cons of Annual Employee Performance Reviews

Designing Digitally


The Pros and Cons of Annual Employee Performance Reviews

With the rapid rise of the remote-work economy, companies worldwide are restructuring how they do business. This includes shifting mentalities when it comes to their workforce, as well.

Human Resources (HR) and Learning and Development (L&D) departments are rethinking their hiring and training processes. Executives are investing in employee online learning, and managers are revising the way they conduct their employee performance evaluations.

A global workforce culture is quickly starting to take shape, and this is, in turn, leading to a chain of changes all over the map. Employers would call each staff member in for a one-on-one annual performance review in the past; today, most evaluations need to happen online.

Let's explore an annual employee performance review and layout a few helpful tips for efficiently doing this.

What Are Annual Performance Reviews?

Performance reviews, or performance appraisals, imply evaluating an employee’s productivity, performance, and overall growth within an organization over a certain period. An annual appraisal, of course, looks at how that specific employee performed in their job over the last year.

There is no one right way of conducting an employee evaluation review, and this can be both a good and a bad thing. The good news is that you can create your evaluation method based on your business goals, desired employee key performance indicators (KPIs), and available resources.

The downside of not having one format for these reviews is that you or your team leads might not possess the necessary expertise to take on such a detail-oriented process. With hundreds of business models out there, it can feel nearly impossible to create a performance appraisal template that every department in your company can use.

The Pros and Cons of Annual Performance Reviews

The reasons for doing annual employee reviews are just as important as the review strategy and expected outcomes. Incorrectly implemented employee performance evaluations can lead to frustration on both sides of the fence. Staff members might feel their results are unfair, and managers might get the brunt of it.

First, make sure you have solid reasons, goals, and expectations for conducting employee appraisals. Then, analyze the pros and cons of annual employee reviews to ensure you dodge the pitfalls that can follow.


As luck favors the prepared, here are the cons of doing employee performance appraisals:

  1. Unreliable assessments

Unreliable assessments can often occur. This can happen because of a flawed evaluation process. But, it can also occur because of human bias. To ensure you minimize errors, talk to your managers or assessment experts to figure out what these biases might be and knock them out of the equation.

  1. Increased anxiety

Everyone gets nervous about assessments, whether they happen at work or during learning. The thought of an impending evaluation can put people on edge, employees and the assessing managers alike. A short online training module about the necessity of annual reviews should help your staff deal with this process much easier.

  1. Overdrawn process

A well-structured employee assessment process is essential because it saves your managers time and your company money. You can waste a lot of time if your review goals are not clear, and the results will likely be faulty.

  1. Comfort zone activation

Since we're talking about yearly employee appraisals, the time between each assessment is long enough for employees to become complacent in their job roles. Some staff members might kick into high gear as you near the assessment period. As such, you might not get valid data about their productivity and efficiency.


  1. Growth timeline and bonuses

You can use employee performance reviews to get a sense of each team member's growth pattern and see how they evolve in their jobs. Review bonuses are also a good incentive for your staff to perform better in their daily tasks. Documenting how employees grow year-to-year will put you in a better position to helping them succeed as well as establish how salary increases, bonuses, or other rewards are best allotted.

  1. Bonding experience

Depending on the type of workplace culture you cultivate, an annual employee assessment process can boost productivity and bring co-workers closer together. You can use this opportunity to encourage communication, open discussions, and solidarity between members of your organization.

Managers can benefit from a deeper understanding of their staff, while employees can feel safe approaching difficult subjects. Don't shy away from asking difficult questions. Most of us grow out of discomfort. Just make sure you do it diplomatically and with empathy toward each employee's individual experience.

  1. Create a feedback loop

Take advantage of the assessment period to encourage staff members to talk openly about what they expect from you and your management. Ensuring that employees are comfortable expressing themselves can create a feedback loop that will help your business flourish.

  1. Better planning and goal setting

Knowing where your employees stand in terms of job productivity, their professional and personal goals, and what areas they are having trouble in can aid you in planning for the future. Discuss your business goals openly and ask employees to share their ambition concerning their careers.

Tips for Effective Employee Performance Evaluation

  1. Get the whole team on board

A manager with a high number of people on their team can find it challenging to get to know each of them on a personal level. Setting aside time to talk to each employee is time-consuming. Thus, asking team members to evaluate each other and give feedback about how they work together can bring more profound insight into how your workforce is performing as a whole and on an individual level. 

  1. Get employees to do self-evaluations

Another excellent tool for evaluating employee work is by asking them how they see themselves in their roles. Use diplomacy to challenge their answers and arrive at reasonable conclusions together.

  1. Stop comparing

We're all different. We learn at different speeds and excel in various skills. This is why you should refrain from comparing one employee against another. Doing this will make each of your workers feel important and seen. They'll be more inclined to come to you with their issues, be more involved with the growth of your business, and get along better with their co-workers.

  1. Keep it light

Although assessments can be clear indicators of productivity, don't put too much stock into them. Remember that these are yearly reviews, and a lot can change in 12 months. In this way, you'll avoid putting too much pressure on your employees and leave space for flexibility and improvement.

Consider doing quarterly employee reviews or even have a weekly check-up. Whatever type of assessment you choose to use, at the end of the day, the most important element to encourage is transparent, honest communication between employees and managers.


Conducting employee performance evaluations can be a double-edged sword. Take the time to plan your assessments and perhaps even hire an expert to come in and help you. Transparency in your evaluation process will lead to increased trust between your managers and their team. The focus should be on open, clear, and honest communication. 

Online training solutions are a great way to prepare your employees for success when review time comes around, should you choose to do so. They create realistic job scenarios, allow employees to learn from mistakes, and offer the ability to learn new skills from anywhere. If you would like to talk with someone about your employee performance strategies and how Designing Digitally can help, get in touch with our team today.