Annual Review

The Annual Performance Review; One of the Most Underrated Management Tools!

The Annual Performance Review is one of the most underrated conversations any manager can have with their people. Its also one of those conversations that managers dread and avoid.

In this edition we are going to explore the annual performance review, what it is, why its important, and how to ensure you have a meaningful one.

What is the annual performance review?

Before I explain what is an annual performance review, let me be absolutely clear about what it is not:

  • It is not a one off conversation you have at the end of the year.
  • It is not an opportunity to punish an individual.

The annual performance review is a collaborative conversation that summarises the various performance conversations that have taken place throughout the year between a manager and an individual.

It is used to evaluate the value of an individual's contributions to the organisation over a period of time, and to set development objectives for the coming period.

There should be zero surprises during this conversation. If there is, it is an clear indicator that the manager has not had regular conversations with the individual around his or her performance.

What are the benefits of an annual performance review?

A meaningful annual performance review has a variety of clear benefits for an organisation, managers and individuals, some of which include:

  • It summarises where the individual did well, and where there are opportunities to improve.
  • It reinforces what individuals have accomplished and helps them to map out areas for improvement.
  • It helps organisations to evaluate their overall workforce and identify competency gaps.
  • It helps organisations to evaluate the effectiveness of managers in providing feedback, coaching, and support to their people.
  • It helps to foster a feed forward culture.

Individuals should walk out of the annual performance review feeling motivated with complete clarity around where they did well, where they need to improve and how to improve.

Please note: There are zero benefits of having an annual performance review if there hasn't been regular performance conversations throughout the year!

What should be discussed during an annual performance review?

Purpose: Explain the purpose of the performance conversation; the topics you intend to discuss and the overall flow.

Example: The purpose of this conversation is to review your performance for the past 12 months, to explore how you contributed, where you did well and where you could have done better, to identify behaviours and skills that need to be developed, and to map out a plan to develop these behaviours and skills

Role & Responsibilities: Review role and responsibilities, and goals set during the previous appraisal and at the beginning of the year.

Goals Met & Missed: Discuss goals that have and haven’t been met and explore what actions, behaviours and skills attributed to meeting or missing goals.

Key Achievements: Discuss the key achievements that the individual is proud of, and explore what actions, behaviours and skills attributed to these achievements.

Please note: It’s important that you recognise the individual’s achievement and share your observations on his or her behaviour.

Final Rating: Summarise how the individual has performed, share the final rating on his or her performance and explain the rationale. Multi-rater feedback should play a key role in the final rating.

  • Do not apologise and get emotional. Be specific and objective.
  • Do not assume or listen to hearsay. Be factual.
  • Do not beat around the bush. Be direct and transparent.

Irrespective of what the final rating is, it’s the managers responsibility to own it!

Developmental Areas: Discuss behaviours and skills that need or want to be developed, and the impact they will have on the individual.

Actions: Discuss and agree on a course of action going forward. The goals should be SMART: Specific / Measurable / Attainable / Realistic / Time Bound

Summary: Summarise the performance conversation, capture what was learned and reiterate the action plan going forward.


The overall effectiveness of annual performance reviews depends on the quality of organisational processes, the clarity of performance criteria, and the intention of managers conducting the reviews.

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