Replacing Annual Reviews with Regular Feedback and Communication

Annual performance reviews are the dreaded reality of so many organizations. Literally no one looks forward to them, and their effectiveness is as close to zero as you can get.

They’re too far apart to help your strong performers improve. They’re so slow in coming that they’re devastating to those who get a bad review.

Because of that reality, managers often avoid using the review to give the real feedback employees need. And ultimately, very little changes.

At my last company, we got rid of annual performance reviews entirely. We replaced the dreaded yearly ritual with a lightweight, high-impact feedback system that actually helped people grow. It created tighter feedback loops, clearer accountability, and real performance gains — every single quarter.

We call this process Performance Feedback. Here’s how it works.

After each quarter ends, we immediately begin the process. During week one of that first month, the employee fills in a few simple answers to these questions…

• What went really well during the last quarter? (Max four bullet points, 280 characters each.)
• Where can we raise the bar during this next quarter? (Max four bullet points, 280 characters each.)
• Give me feedback as your manager. What is one way I supported you well this past quarter, and what is one way I could have better supported you? (Max two bullet points, 280 characters each.)

The same week, the manager brainstorms their thinking on the first two bullet points for the employee.

During week two, the manager fills in their responses to the employee’s answers, as well as adds any additional thoughts from their brainstorm. They try to follow the same bullet point and character limits.

The manager also determines the employee’s rating for that quarter, which is a part of determining their performance bonus award for the quarter. (I like to use three ratings — Elite, Excellent, and Needs Improvement — but this decision depends on how you hire in your organization. More on this in next month’s essay on performance bonuses!)

During weeks three or four, the regular 1:1 is replaced by a performance feedback discussion. The manager shares back their responses, and discusses the feedback in depth during the meeting.

They also candidly share the rating and share precisely what it took that quarter to reach “Excellent” over “Needs Improvement” — nobody is confused about what they did or could have done to reach an acceptable performance rating.

The manager logs two other pieces of information. First, they ask the employee for their happiness rating. The question sounds something like this — “hey, if 6 is ‘you can pry me out of this job with your cold, dead fingers’ and 1 is ‘I am actively looking for another job right now,’ how are you feeling about your job here?”

Then the manager privately sets their own outlook for each employee — I like to use Confident, Optimistic, or Concerned.

After the performance feedback cycle concludes, we use all this data during the next few months to identify how we can work with people who need to improve their performance, exit those who aren’t going to make it, and double down on retaining our Elites and our Excellents.