The death of the annual HR cycle

Geir Darge · 13 Jun

The annual review: a bastion of outdated management...


Once upon a time the yearly appraisal was seen as the quickest and most sensible solution to employee performance management. However, the annual cycle is falling out of fashion, with forward thinkers seeing it as time consuming, ineffective and the product of lacklustre management.

At their best, yearly appraisals give a retrospective overview of an individual’s performance. At their worst, they cause widespread anxiety among your workforce – not to mention reams of paperwork with little positive impact on performance.

For the most part, they functioned as a veneer of change. Their scarcity and inflexibility meant that meaningful conversations about an individual’s strengths and weaknesses were rarely reached.

Why the annual cycle?

Why did the annual cycle become so prevalent in the first place? Businesses operate periodically and financially, the yearly cycle works incredibly well: it’s consistent, stable and foreseeable – all the conditions needed for  managing money.

So running personnel matters in the same way makes sense, right? This error of judgement has meant that  everything from targets to feedback has been handled in parallel with capital.

The problem is this: people are not assets and cannot be managed as such.

Start a continuous and flexible dialogue

Lucy Adams of Disruptive HR believes we should be adopting practices that are continuous and flexible. “Companies that have a strong innovative culture don’t wait to give feedback till the end of the year,” she explained in a recent Perkbox webinar, “they don’t wait to show recognition, they don’t wait to move their talent and they certainly don’t wait to see how their people are doing.”

Fostering an environment of innovation, where your employees are engaged with your company’s vision, means facilitating constant and open dialogue between management and employees.

Bridge the employee/management gap 

As well as driving innovation, ditching the annual cycle will improve your company’s employee relations. Poor management can almost always be attributed to a lack of communication and mutual understanding between employees and their seniors. A system based on infrequent yet consequential discussions can only pronounce the divide.

Holding regular and informal meetings removes the pressure that reviews often carry, and instead opens the playing field up for more genuine conversations that bring managers closer to their employees.

Reward performance not time

The traditional bonus system does nothing to reward the everyday hard work of employees. In fact the pressure of working towards precarious sums of money can hinder productivity.  

Lucy suggests an alternative system of ‘spot’ bonuses: smaller amounts – between £50 and £500 – that reward continued high performance. Spot bonuses, or mission bonuses are not straightforward replacements for annual bonuses, however they respond to high performance, rather than the passage of time.  

Introduce a culture of feedback

Most importantly, regular and informal catch-ups will nurture a culture of feedback throughout your workforce. This is the end goal of any management program; a workforce that are not working with tunnel vision but rather engaging with one another’s objectives.

To achieve this, it’s all about leading by example and starting open dialogues with your employees on the office floor. You need to weave performance conversations into the fabric of your team’s daily routine which is simply impossible to do if it’s a once a year occurrence.

Introduce feedback and it will catch on. Humans are hardwired to give each other advice, or ask for help when they need it.

To find out more about breaking HR moulds, then take a listen our webinar, How HR can stop stressing and start innovating:


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