The Annual Review Just Isn’t Enough

Today, I’m kicking off something I’ve wanted to do for a long time… a place to share what I’m seeing, what’s shifting, and what actually drives impact in the world of performance, leadership, and growth.

After years of leading revenue teams through acquisitions, scale-ups, and reorganizations, one truth has become impossible to ignore:

Annual reviews alone are not where performance, or business impact, truly happens.

The companies that win aren’t waiting until Q1 to talk about performance. They’re creating a continuous rhythm of visibility, feedback, and intelligent decisions that move work forward every day.

At Klaar, we see this shift play out across thousands of performance conversations every month, giving us a front-row seat to how top organizations are evolving. The message is clear: the annual review still matters, but it’s no longer enough.

What the Data Tells Us

Only 14% of employees say reviews inspire improvement

Gallup found that only 14% of employees strongly agree their performance reviews inspire them to improve. The other 86% feel disengaged, unseen, or uninspired by the process.

A growing wave of “ghost growth”

A MyPerfectResume study found that 78% of workers are taking on new responsibilities without raises or promotions. That’s a signal that feedback and recognition aren’t keeping pace with contribution and that disconnect breeds disengagement.

Workloads are expanding without alignment

In a December 2024 survey, 77% of employees said they regularly take on work outside their job descriptions, and 93% reported burnout as a result. This isn’t ambition, it’s a failure to recognize and reward evolving roles in real time.

Reviews aren’t seen as useful

A Leadership IQ study of 48,000 respondents revealed that only 13% of employees and managers find performance appraisals useful, and 88% said it negatively impacts their opinion of HR when the process feels hollow.

Why Annual Reviews Fall Short

The truth is, annual reviews were built for a slower world: one where priorities didn’t shift every quarter and feedback could wait.

But today’s work moves faster than that. When feedback is delayed, when goals have already changed, and when recognition comes months too late, performance systems fail to create business impact.

The biggest issues?

• Timing: By the time reviews happen, the work that matters most is already months old.
• Overload: Annual reviews try to do everything at once… assessment, development, compensation, promotion. It’s too much for one meeting.
• Bias: Research suggests up to 62% of ratings reflect the rater more than the ratee, which undermines trust.
• Disconnection: When high performers stretch beyond their roles without acknowledgment, engagement plummets.

Continuous Feedback: Where Real Impact Happens

That’s why the most forward-thinking organizations are shifting from review cycles to performance rhythms.

Continuous performance isn’t about eliminating annual reviews; it’s about surrounding them with ongoing feedback, coaching, and calibration that keep goals clear, teams aligned, and performance visible.

Here’s what it looks like in practice:

• 1:1 feedback in the flow of work: Managers and employees share quick, structured updates weekly or biweekly, not just once a year.
• Automated nudges and reminders: Keep performance top of mind without adding admin.
• Real-time calibration: Build fairness into every cycle by normalizing expectations across teams.
• Predictive insights: Spot risks (like disengagement or workload spikes) before they turn into turnover.

When done right, this shift doesn’t just improve experience, it drives measurable results.

Across early adopters, we’ve seen:

• 30–40% increases in engagement
• 2–3× faster calibration cycles
• 20–25% higher retention among top performers

What to Do Instead

If you’re wondering where to start, here’s what I tell leaders:

1. Don’t throw out the annual review…enrich it. Use real data from the flow of work to inform annual reviews, and surround them with consistent, lightweight 1:1s and check-ins throughout the year
2. Make feedback a steady rhythm. Replace “feedback season” with ongoing dialogue that builds trust and agility.
3. Document impact as it happens. Capture outcomes in real time, not retroactively.
4. Connect performance to growth. Use every conversation as a moment to discuss development and career pathing.
5. Use AI and automation to scale fairness. Let technology surface insights so leaders can focus on coaching, not chasing data.