Making annual reviews valuable: beyond the rating

It's that time of year again. The annual performance review.

Performance is discussed, bonuses are decided and promotions debated. Somehow, we're expected to fit an entire year of achievements, challenges and development into a single conversation.

How on earth do we do that?!

Well, the short answer is that we can't. And I don't think we should be trying to.

An annual review shouldn't come with surprises

Performance conversations need to happen throughout the year, not just when the calendar tells us it's time for a review.

Call them one-to-ones, career conversations, regular feedback or one of the many other names we give them. The principle is the same. Managers and employees should be talking openly about what's going well, what could be better and where support is needed.

If I do something wrong, have I been told? More importantly, have I been given the opportunity and support to learn from it?

Finding out in November that I could have chaired a meeting better back in January is less than useless! What am I supposed to do with that information ten months later?

Of course, feedback isn't just about what went wrong. Recognising someone's contribution, helping them build on their strengths and identifying opportunities to develop are equally important.

And it needs to work both ways. As a manager, I should be prepared to hear where I could have provided better support, clearer direction or more opportunities.

I appreciate this isn't always within an employee's control. Sometimes you just have a manager who doesn't prioritise these conversations. That's a leadership problem, and the responsibility shouldn't sit entirely with the employee to fix it.

So, if these conversations should already be happening throughout the year, what is the annual review actually for?

Trajectory: direction of travel against a moving baseline

For me, it's an opportunity to step back and look at the bigger picture.

Individual conversations tell us what's happening at a particular moment. An annual review lets us look for patterns in performance, behaviour and development across the whole year.

I'm particularly interested in the concept of trajectory.

And I don't just mean whether someone has improved since their last review. I think of trajectory as direction of travel against a moving baseline.

Firstly, how has someone's capability developed?

Are they more effective than they were twelve months ago? Have they developed new skills, improved their judgement or become better equipped to handle the challenges of their role?

Secondly, there's the changing baseline.

Organisations don't stand still. Technology evolves, working practices improve, customer expectations change and what was considered excellent performance a few years ago might now be a standard expectation.

Someone might be more capable than they were last year, yet still be falling behind the changing requirements of their role.

But I think we need to be careful about what we mean by "raising the bar".

Expecting someone to develop their skills, improve the quality of their work or adopt better practices can be entirely reasonable.

Expecting them to complete twice as much work simply because the organisation wants to deliver more? That's not necessarily raising the bar. It might just be an unrealistic demand for more output.

Higher performance isn't always about producing more. Sometimes it's about making better decisions, reducing risk or improving how work gets done.

And if expectations are changing, people need to know. We can't continually move the baseline without explaining what has changed and providing the opportunity and support to adapt.

This isn't about everyone needing to pursue promotion, either. Someone can be excellent at their job without wanting to move into a more senior position or take on management responsibilities.

It's about understanding how their contribution and capability relate to the evolving expectations of their role.

What makes someone a top performer?

This brings me to another question I think annual reviews should explore.

What do we actually mean when we describe someone as a top performer?

Is it simply the person who delivers the most work, achieves the highest targets or demonstrates the strongest technical expertise?

I don't think so.

Individual contribution is undoubtedly important, but exceptional performance involves much more than output alone.

How does someone respond to challenges? Do they reflect on feedback and adapt their approach? Do they share knowledge, support colleagues and contribute positively to the wider team?

Someone who consistently delivers outstanding individual results but makes collaboration difficult for everyone around them might be an excellent individual contributor. But would I consider them a top performer? Probably not.

Equally, someone might not have the highest output or greatest technical expertise, but could have demonstrated remarkable growth, helped colleagues succeed and improved how their team works.

That deserves recognition.

I also believe a top performance rating needs to be earned each year, rather than automatically carried forward because someone received it previously.

That doesn't mean people must constantly acquire new skills or responsibilities. Sustaining an exceptional contribution can itself be a significant achievement. But we should assess the contribution made during the year, rather than relying on someone's reputation or previous rating.

And we need to be careful about how we assess behaviours.

Being collaborative doesn't necessarily mean being the loudest person in a meeting. Demonstrating confidence doesn't always look the same. Constructively challenging a decision isn't the same as being difficult.

We should assess people's actions and impact, rather than how closely their personality matches our expectations of a top performer.

Through my Level 7 leadership studies, I've been reflecting on the relationship between performance management and developing people. The CMI Professional Standard similarly connects managing performance, coaching and building capability.

For me, it reinforces the importance of looking at someone's wider contribution, not just the tasks they've completed.

A conversation, not a verdict

Of course, none of this works if an annual review becomes an exercise in building a case for or against someone's performance.

Both parties should come prepared, bringing evidence, examples and reflections on the year. But it should be a genuinely open conversation, not simply a manager delivering their judgement.

If someone hasn't developed as expected, we need to understand why.

Were expectations clear? Was useful feedback provided? Were there opportunities to develop? Was something getting in the way?

And critically, what could I have done differently as their manager?

We can't expect people to grow while failing to create the conditions for them to do so.

Equally, being open to feedback doesn't mean automatically agreeing with it. Good feedback requires both people to engage, listen and sometimes challenge one another.

That's probably a whole other article!

Performance assessments may feed into pay, bonuses or promotion decisions, and understandably those outcomes matter. People deserve a fair explanation of how their performance has been assessed.

But they also deserve a meaningful conversation about their future, rather than one entirely consumed by a rating.

What happens next?

We've looked back at the year, discussed the successes and challenges, and considered someone's contribution and direction of travel.

So what are we going to do with that?

What does the person want to achieve next? How are the expectations of their role changing? What opportunities can we create, and what support do they need?

And importantly, what am I committing to as their manager?

One of the things I find most rewarding about leadership is helping people develop. Sometimes that's supporting someone towards a more senior position. Sometimes it's helping them become more confident, capable or effective in the role they already enjoy.

Both matter.

I don't think a successful annual review is one where everyone leaves feeling they've completed the required paperwork.

It's one where both people leave with a shared understanding of the year, recognition of what's gone well, clarity about what needs to improve and a plan for what comes next.

The annual review shouldn't be where we discover how someone has performed. It should be where we understand their direction of travel, recognise their wider contribution and agree how to move forward.

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Further reading

• CMI — Professional Standard: Interpersonal Excellence — Managing performance, coaching and developing people.
• CMI — Support performance and development — Evidence-based appraisals, feedback and development planning.
• CIPD — Performance management — The role of ongoing performance conversations and structured reviews.
• Borman & Motowidlo (1997) — Task Performance and Contextual Performance — Research distinguishing individual task performance from behaviours that support wider organisational effectiveness.