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For decades, annual performance reviews played a pivotal role in employee evaluations. This standard approach involves conducting a once-a-year discussion where employees get feedback on their performance over the past year. The procedure ends with a performance rating, which affects appraisals, salary hikes, and opportunities for career advancement.
Unlike annual performance reviews, real-time feedback is a continuous, dynamic approach where feedback is given and accepted throughout the year. Hence, shifting from annual performance reviews to real-time feedback reflects a growing recognition that employees benefit from frequent, constructive input.
Understanding the Limitations of Annual Performance Reviews
Some limitations of annual performance reviews that can slow down employee growth and organizational success are as follows:
1. Infrequency and Recency Biases
One of the most notable problems with annual performance reviews is that they happen infrequently. Assessing an employee’s work over a year creates a recency bias, where recent events have a stronger impact on how they are evaluated.
For example, what someone did in the last few weeks might count more heavily than what they accomplished earlier in the year. This type of bias undermines accuracy and fairness in evaluations.
2. High Pressure and Anxiety Associated with Annual Reviews
The other drawback to this type of review process is that
