Annual Appraisals Aren’t Bad – DON’T Replace Them!

Aug 23, 2023 | Appraisals and Performance Reviews, Performance Management Discussion

Continuous performance development is the right approach, so we should ditch annual appraisals right? Wrong! Annual appraisals are part of continuous performance development, not a replacement.

Many people mistakenly think that if want to do continuous performance development, you should stop doing annual appraisals. It’s a common misunderstanding, and it’s simply not true! The two practices are not mutually exclusive; in fact, they complement each other exceptionally well. In this article, we’ll explore the essential interplay between annual appraisals and continuous performance development, including online performance management software such as PerformanceHub’s, with features like 121s and configurable appraisals, can harmoniously integrate them.


Unravelling the Annual Appraisal Misconception

In the dynamic world of employee management, annual appraisals have long been a cornerstone. Yet, they often find themselves caught in a whirlwind of misconceptions, especially when pitted against continuous performance development. Many organisations wrongly believe that you can’t have annual appraisals and continuous performance development at the same time. But that’s not true! In other words, it’s an unfounded belief that you can’t have one if you use the other.

But is this really the case? Does opting for annual appraisals mean turning your back on continuous performance development? Diving into this article, we aim to clear up this misunderstanding and highlight the close connection between these two vital parts of performance management.


The Nature of Annual Appraisals: A Reflective and Forward-Looking Tool


Defining Annual Appraisals

Annual appraisals are far more than a yearly ritual. They are a strategic and reflective process, aimed at reviewing an individual’s performance over the past year and planning for the year ahead. This isn’t merely about evaluation but also about setting objectives that align with the organisation’s goals. Aligning personal development to help achieve those objectives and personal. And, importantly, opening doors to further development.


Purpose and Utility of an Appraisal

Imagine annual appraisals as a bridge that connects the past, present, and future. They allow both employees and managers to pause and reflect on achievements, challenges, and lessons learned. Furthermore, they set the stage for creating clear, attainable objectives for the upcoming year.

In many ways, annual appraisals embody the idea that reflection and planning are two sides of the same coin. Take, for instance, a software development company that assesses the performance of its developers yearly. This evaluation doesn’t merely sum up their code quality or project completion rate but helps identify areas for growth, and learning opportunities, and aligns individual objectives with the team’s overarching goals.


Finally – The Real Driver For The Annual Appraisal

Here’s the clincher! As we mentioned above, one important task during the appraisal is for the manager and employee to create future objectives. Those objectives need to align with the company objectives, which are normally only created once a year. So, to make sure that an employee has set relevant objectives as soon as the company has published its goals for the year, the appraisal should be done around the same time.

You might now be thinking – well, a manager can just create new objectives whenever. True, but you should now consider the employee’s development plan. Do they have the right skills to deliver those objectives? Remember that the development plan is also part of the appraisal.

We now have a chain of events:

org-objectives => employee-objectives => dev-plan

Given the start of this chain is an annual event, it makes sense that the appraisal is too.



Continuous Performance Development: Understanding the Process

What is Continuous Performance Development?

Continuous performance development is an ongoing approach to employee development, focusing on regular feedback, open communication, and continuous learning. It emphasizes frequent check-ins and goal adjustments, fostering a culture of growth, adaptability, and collaboration. Enhancing overall productivity and engagement.

In the context of continuous performance development, 121s are not mere formalities but vibrant, constructive dialogues that keep both employees and managers aligned and focused on shared goals.

Importance of 121s in Facilitating Continuous Development

  • Regular Insights: 121s provide frequent insights into an employee’s progress, promoting timely adjustments and ongoing support.
  • Fostering Relationships: They build trust between managers and employees, promoting transparent communication and collaboration.
  • Flexibility: Continuous dialogue ensures that goals and development plans remain adaptable to changing circumstances.

Annual Appraisals and Continuous Development: A Symbiotic Relationship

How They Complement Each Other

Unravelling the threads of continuous performance development and annual appraisals, it’s evident that they are not opposing forces but complementary aspects of a well-rounded performance management strategy.

Annual appraisals and continuous development are not adversaries; they are partners. For improved organisational alignment, you need a point in time where you take a holistic look at employee performance and plan for the future. An annual appraisal is ideal for this. Also, to make sure plans remain relevant, and employees remain engaged and focused, you need continuous performance development too.


The Arguments for Annual Appraisals

1) Alignment with Annual Processes

One of the strongest arguments for annual appraisals comes from the fact that organisations typically operate on annual cycles. Planning, budgeting, and goal setting often align with fiscal years or other annual timelines. So to maximise organisational alignment, employee objectives should be set soon after this annual cycle.

This will trigger a review of development or training needs. Looking at what skills or training is required to help the employee deliver their objectives and achieve their goals.

Often, feedback from the manager or feedback from peers will help formulate this development plan. Again, appraisals often include peer feedback. If that feedback is current, it will be more effective. Given 360 feedback is often an element of an appraisal, we have another argument for doing it all at the same time.


2) Comprehensive Performance Overview

A full annual appraisal provides a broad view of performance, achievements, and areas needing improvement. Importantly, the annual, dedicated event sets time aside for this holistic review. Check-in meetings are often too focussed on the ‘now’. This fosters better organisational alignment. As it is an infrequent event, more time can be carved out to support it. With frequent check-in meetings, it is very tempting to focus on immediate priorities. The annual appraisal meeting removes this focus, allowing a broader review of capabilities.


3) Equal Ground for Perfomance Comparison

Since all employees are assessed around the same time, performance can be compared on a level playing field, offering insights for pay awards, promotions, and more. If one assessment is done at a different time to another, you can’t compare performance properly as things may have changed.

How Annual Appraisals Enhance Continuous Development

By now, we’ve established that annual appraisals aren’t at odds with continuous development. Instead, they can enhance it by:

  • Providing Structure: Annual appraisals offer a framework for continuous development, setting clear benchmarks and goals for the year.
  • Ensuring Accountability: They hold both employees and managers accountable for the commitments made, fostering a culture of responsibility.
  • Supporting Organisational Alignment: They enable an alignment of personal growth with broader organisational strategies.



The harmony between annual appraisals and continuous performance development is not just a theory; it’s a proven strategy that leading organisations are embracing. By understanding that these practices are not mutually exclusive, but rather integral parts of a comprehensive performance management system, companies can foster an environment where growth is consistent, aligned, and reflective.

With tools like PerformanceHub, integrating annual appraisals with continuous performance development becomes a streamlined and efficient process, offering a balanced approach that caters to both the long-term vision and the immediate needs of an organisation.

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