For many years when I worked for large companies, I was responsible for the annual performance review process: identifying competencies, creating forms, training managers, and tracking those yearly conversations that were often painful for everyone involved. Since then, more and more companies are eliminating the annual review.

The tight labor market seems to be the biggest impetus for the recent wave. With more frequent reviews, managers can increase antsy employees’ salaries, hoping to retain talent. However, companies are cautious because more frequent reviews may set expectations that employees will always get an increase. Instead, managers have other retention tools, such as increasing benefits and giving one-time bonuses.

This recent news reminds me of a 2016 article. But at that time, the impetus was to increase feedback. When an annual process exists, some managers rely too heavily on that one meeting in lieu of giving feedback when needed throughout the year. Eliminating the review also reduces anxiety and ends a rating system that some see as inaccurate or unfair.

Of course, the best feedback is ongoing. Ideally, managers and their reports have a relationship where either can initiate a conversation at any time to encourage accountability and improved performance.

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