Why Annual Performance Reviews Are The Greatest Thing Since Sliced Bread

This is part of LinkedIn's new Newsletter Series. To get weekly exclusive CEO interviews, and insights on leadership, the future of work, and employee experience hit the "subscribe" button here.

As a leader, you have countless tools to get the most out of your employees and lead your company to success. And the best resource happens once a year: annual performance reviews.

Annual performance reviews have been around for nearly 100 years because they work--just ask some of the earliest adopters like General Electric and Lord & Taylor. It creates a standard procedure that gets the most out of employees. 

These yearly meetings are the best way to know who is performing and who is slacking. And because they’re often tied to financial incentives, annual reviews motivate employees to work hard. When the review is approaching, employees have a built-in deadline to turn their performance around. This is their one chance to prove their worth. If they don’t improve, they don’t get the bonus, or they get fired--simple as that. 

If given a choice to fire two similar employees, the annual performance review can point the leader in the right direction. And the same goes for deciding who to promote. You don’t have time to look at their recent projects and successes, but the annual performance review tells you everything you need to know to make a good decision.

There are too many metrics and factors in performance today. Leaders don’t need any outside information to make the best decisions. They are smarter than everyone else and excellent judges of character and performance, that’s why they’re leaders and those around them aren’t. If a leader gets a weird vibe from employees or can tell from their performance review that they aren’t engaged or putting in their best work, they should fire them immediately. Why keep people like that?

It’s the best and most straightforward way to make personnel decisions instead of getting bogged down with data and metrics. 

Some companies are moving towards models of regular employee feedback. But what successful leader has time to sit down with people that often? Seriously. A leader’s time is better spent making money and only meeting with employees for reviews once a year. When reviews only happen once a year, leaders know what to expect instead of risking being interrupted all the time to talk about an employee’s feelings. 

Leaders don’t need to collaborate with employees--they just need to check in once a year and see how they’re performing. Even in a rapidly changing world, a once-a-year review should be more than enough, because are things really changing that fast? I don’t think so.

Annual performance reviews are the best way to manage people. They put the power where it should be: with the leaders. And they allow bosses to make the best decisions about their people.

If you want to keep your employees working hard and getting results, annual performance reviews are your best option. 

I’d love to see you prove me wrong.

-The Outdated Leader

------------------------------------

Over the last 15 years, I’ve had the privilege of speaking and working with some of the world's top leaders. Here are 15 of the best leadership lessons that I learned from the CEOs of organizations like Netflix, Honeywell, Volvo, Best Buy, The Home Depot, and others. I hope they inspire you and give you things you can try in your work and life. Get the PDF here.