Why Annual Performance Reviews Are So Disliked

In many companies, when the fiscal year or half-year ends, employees write self-evaluations, supervisors add comments, and interview schedules are set. Evaluation sheets include goal achievement rates, behavioral assessments, competencies, areas for improvement, and overall evaluations. Numbers are entered, comment sections are filled, and it concludes with "Let's do our best next term."

At first glance, this seems like a rational system. Companies can grasp employee performance. Employees can reflect on their achievements. Supervisors can explain the basis for raises and promotions. HR can use it for overall talent management.

However, many employees who have experienced this system do not perceive it positively. Rather, as the time for performance reviews approaches, their focus shifts from the work itself to "how to write to look good," "which achievements to emphasize," and "what score the supervisor will give." The evaluation system, originally intended to improve work, inadvertently becomes a "task for being evaluated."

An article published by FlaglerLive, "Job Performance Reviews Are Outdated and Often Pointless," addresses this issue head-on. The article's argument is clear: despite significant changes in work styles, technology, and organizational speed, individual annual performance reviews remain unchanged.

Evaluation sheets, scores, checkboxes, scales from 1 to 10, and ambiguous free-text sections—these formats are easy to manage. However, whether they truly measure employee contributions is another matter.

"Systems for Grading the Past" vs. "Systems for Fostering the Future"

There are broadly two purposes for performance reviews. One is to use them as a basis for decisions on salaries, promotions, placements, and bonuses. The other is to support employee growth and improve work quality.

The problem lies in the fact that many companies cram these two purposes into a single interview.

From the employee's perspective, performance reviews tend to become "a place that influences treatment" rather than "a dialogue for growth." Even if a supervisor says, "I want you to honestly discuss challenges," if the content could affect evaluations or salaries, it becomes difficult to speak candidly. Instead of honestly discussing what they couldn't do, what they're unsure about, or where they need help, the focus shifts to protecting their achievements.

Supervisors also face dilemmas. While they want to support their subordinates' growth, they must also assign scores as evaluators. There are team dynamics and interpersonal relationships to consider. Being strict with one employee and lenient with another can lead to unfairness. Yet, if everyone receives similar evaluations, the system becomes hollow.

When trying to handle evaluation and development in the same setting, the dialogue inevitably becomes defensive. Employees try to present themselves well, and supervisors aim to provide explanations aligned with the system. As a result, discussions on necessary improvements and learning are postponed.

Once a Year Is Too Late

The biggest weakness of annual reviews is their timing.

For example, if an employee struggled with a project from April to June, support and feedback should be provided at that time. What isn't working? Are the goals unclear? Are resources lacking? Is it a skill issue? Is there a problem with team coordination?

However, with an annual evaluation system, these events are reviewed months later, sometimes nearly a year after they occurred. Being told in an interview, "We wanted more initiative in the spring project," feels too late for the employee. The situation has already changed, memories have faded, and opportunities for improvement have passed.

Work progresses in real-time. Challenges arise in real-time. Yet, feedback arrives only annually, diminishing its value as information for improving work.

Recent performance management trends emphasize continuous dialogue over annual reviews, short-term flexible goals over annual ones, and feedback from multiple stakeholders rather than unilateral evaluations from supervisors. In other words, evaluations should be integrated into daily work rather than being an "annual event."

KPIs Are Convenient but Can Mislead

KPIs are extremely convenient tools for organizations. Sales, number of cases, processing time, customer interactions, conversion rates, delivery times, and utilization rates—these figures are easy to compare and manage.

However, what is easy to measure is not necessarily what is important.

For instance, if a call center focuses too much on "number of interactions," each interaction may become shorter. However, this doesn't guarantee that customer issues are truly resolved. In sales, chasing only "number of visits" might increase the count, but long-term trust and value with customers may be neglected. In development, focusing solely on "ticket resolution count" can disadvantage those tackling high-difficulty issues.

Indicators change behavior the moment they become goals. People act according to what is evaluated. Therefore, if the design of indicators is flawed, employees will choose actions that are easy to evaluate over genuine achievements.

This isn't simply about employees being cunning. The system encourages it. If a company says, "Raise this number," employees will look for ways to increase that number. The problem is whether that number truly represents customer value, organizational learning, and long-term growth.

The Illusion of "Objective Evaluation"

One reason evaluation systems are supported is the expectation that "numbers make it objective." Scores, ranks, goal achievement rates, and evaluation comments—these formats certainly appear fair.

However, evaluations are never completely objective.

The same achievements can be viewed differently by different supervisors. Those who achieve visible results are highly evaluated, while those who prevent risks behind the scenes may be overlooked. People who are vocal, good at self-promotion, or have frequent interactions with supervisors may have an advantage. Conversely, work like team coordination, supporting younger employees, and preventing trouble is less visible as achievements.

Especially in modern work, much value arises from collaboration rather than individual achievements. Someone proposes an idea, another shapes it, and yet another delivers it to the customer. When problems arise, multiple people collaborate to solve them. It's challenging to neatly break down such work into individual evaluations.

Nevertheless, companies attempt to quantify evaluations. This is because numbers make explanations easier. They can justify differences in raises, bonuses, and promotion decisions in some format.

However, having numbers doesn't equate to fairness. In fact, sometimes ambiguous judgments are merely wrapped in numbers to appear fair.

The Deep Discrepancy Between Management and Employees

The 2024 survey by Betterworks shows a significant gap in perceptions of performance management between management and employees. Management and HR tend to view their evaluation systems as functioning relatively well. On the other hand, employees do not necessarily perceive it that way.

This discrepancy is crucial.

For management, evaluation systems are mechanisms for managing the organization. They are necessary to understand who is achieving results, who to promote, where to allocate talent, and which teams have issues.

However, for employees, evaluation systems are directly tied to their salaries, careers, dignity, and future. A single evaluation comment can significantly impact motivation. Unconvincing evaluations damage trust in the organization. Especially for employees who feel their daily efforts aren't recognized, annual reviews appear as unilateral judgments from the company rather than growth support.

While management believes "the system is working," on the ground, a cold view spreads: "The evaluation is predetermined," "Interviews are just a formality," "Decisions are based on the supervisor's likes and dislikes." This is a major reason why performance evaluations become hollow.

Reactions on Social Media: Not Just "It's Meaningless"

 

Looking at reactions on social media regarding this theme, dissatisfaction with annual reviews is deeply rooted.

On LinkedIn, there are posts viewing annual reviews as "outdated" and suggesting a shift to management based on trust and respect. One post argued that instead of refining self-evaluation questions, the performance review system itself should be reconsidered. The idea is that stopping work for evaluations and judging the past offers little business value.

However, not all reactions call for the abolition of evaluation systems. Another comment on LinkedIn suggested that performance reviews, if conducted correctly, can be very beneficial for employees. If employees aren't taking the evaluation process seriously, it might be a sign that the system isn't meaningful to them.

On Reddit's career advice posts, dissatisfaction with annual reviews is more vivid. There are voices expressing disappointment over promotions or raises not being realized, or final evaluations not being as high as expected despite positive feedback from supervisors. This indicates that evaluation systems are perceived as "announcements of treatment results" rather than "dialogues for growth."

Additionally, Betterworks, which provides performance management tools for businesses, pointed out on LinkedIn that traditional annual reviews could lead to the loss of talented individuals. Of course, as a provider of related services, their claims have a business context. However, survey results showing that employees view evaluation systems as failures are warnings that companies cannot ignore.

In summary, the debate on social media isn't simply about whether evaluation systems are necessary or not. Rather, many people are concerned about evaluations being delayed, opaque, influenced by supervisors' subjectivity, only used for salary and promotion explanations, and not contributing to daily growth.

Why Companies Can't Abandon Annual Reviews

So, why do many companies continue with annual reviews?

Firstly, because the system is tied to salaries and promotions. As long as companies differentiate between employees, they need some basis for doing so. Evaluation sheets and scores are convenient for this purpose.

Secondly, they are convenient for compliance and HR records. There are many situations where organizations need to keep records, such as who was promoted, why a transfer was made, or why improvement guidance was given. Annual reviews function as a format for this.

Thirdly, the cost of changing existing systems is high. Evaluation systems are linked to salary systems, grading systems, promotion criteria, talent data, and manager training. It's difficult to change just one part, and changing the entire system requires time and effort.

Fourthly, having numbers and ranks gives a sense of control. Even if they don't fully reflect the reality on the ground, once turned into tables and graphs, it appears as if the organization is understood. This is the "illusion of objectivity."

In other words, annual reviews remain not because they are highly effective, but because they are convenient for organizational management.

What Is Needed for Future Performance Evaluations

So, will everything be solved if annual reviews are abolished? The answer is no.

If evaluations are eliminated, decisions on salaries and promotions become ambiguous. The supervisor's subjectivity may become even less visible. For employees, not knowing how their work is perceived is unsettling.

What is needed is not to abolish evaluations but to change their purpose and method.

Firstly, feedback should be given regularly, not just once a year. Small discrepancies should be corrected while they are still small. Good behavior should be recognized on the spot. If there are issues, discussions should happen as soon as possible, not months later.

Next, goals should not be limited to fixed annual targets but should be short-term and adaptable to the environment. Evaluating based solely on goals set a year ago is unrealistic amid changing markets, customers, technology, and team situations.

Thirdly, evaluation targets should not be limited to individual numbers. How to view collaboration, learning, customer value, team contributions, problem-solving, and contributions to psychological safety—elements essential to modern work—is important.

Fourthly, it's necessary not to rely too much on a single supervisor's evaluation. By incorporating multiple perspectives, such as from colleagues, related departments, customers, and project members, as in 360-degree feedback, evaluation biases can potentially be reduced.

Fifthly, evaluation interviews should not be solely "judgment sessions." Discussions about salaries and promotions should be separated from those about growth support as much as possible. When the same setting is used for both, it becomes difficult for employees to speak candidly about challenges.

In the AI Era, Evaluation System Issues Become More Apparent

As AI and automation advance, human work shifts from routine tasks to judgment, creativity, coordination, empathy, and problem-solving. This poses a significant challenge for evaluation systems.

Indicators like processing volume and work hours are relatively easy to measure. However, organizing complex problems, preventing team conflicts, noticing potential customer dissatisfaction, and creating environments for young employees to grow are not easily quantifiable.

If companies cling to old KPIs, the unique values that only humans can provide become harder to evaluate. Conversely, if only easily measurable workloads replaceable by AI are evaluated, employees will optimize for measurable tasks rather than the abilities they should truly develop.

In the AI era, performance evaluations will question not just "what and how much was done," but "what value was created," "how did one collaborate with others," "how did one adapt to change," and "is one continuously learning."

In that sense, old annual reviews may increasingly diverge from the realities of work.

It's Time to "Evaluate" Performance Evaluations

Companies evaluate employees annually. But how much do they evaluate the evaluation system itself?

Is the system leading to employee growth? Is it creating a sense of satisfaction? Is it improving relationships between managers and subordinates? Is it enhancing customer value? Is it promoting teamwork? Or is it merely a ritual for assigning scores, explaining salary differences, and storing documents?

What is truly needed is not to score employees just once a year. It's about aligning expectations, sharing challenges, supporting growth, and correctly recognizing achievements in daily work.

Annual reviews may not disappear entirely soon due to the realities of salaries, promotions, legal, and HR management. However, what should be at the center is changing. From scores to dialogue. From past judgments to future growth. From individual competition to team value creation.

If performance evaluations aren't truly fostering employee growth, perhaps what should be most evaluated is the evaluation system itself.

Source URL

Article published by FlaglerLive. Main article on how annual performance reviews are outdated and how KPIs and evaluation systems do not adequately capture modern work.
https://flaglerlive.com/performance-reviews/

Channel NewsAsia edition. An explanatory article on the same theme by Danae Anderson and Jeremy Morrow, confirming content on annual reviews, KPIs, and the transition to continuous feedback.
https://www.channelnewsasia.com/commentary/job-performance-review-manager-employee-goal-kpi-5991596