How to Run Effective Annual Performance Reviews

According to a Willis Towers Watson study, 56% of employees find the annual review disappointing and barely 36% of organizations think their performance management is effective.

So how do you turn this key event into a genuine HR management tool rather than a mere formality?

This article walks through the best practices for running successful annual performance reviews: preparation, conversation framework, digital tools, follow-up — and how a strong HRIS can multiply the impact.

What is an annual performance review? What is it for?

The annual performance review — sometimes just called the "annual review" — is a formal exchange between a manager (or the employer) and their team member, typically held once a year.

It is the moment to take stock of the year's work, evaluate the employee's skills and performance, and set new objectives for the year ahead.

This meeting addresses several important stakes:

For the organization: the annual review lets you measure the employee's contribution to organizational objectives, identify strengths and areas to improve, and align individual objectives with the organization's strategy.

It is a performance and talent management tool: results from annual reviews can inform decisions on promotions and salary increases, or flag employees who need particular support.

More broadly, this ritual contributes to your employer brand — an evaluation process perceived as fair and constructive reinforces employee trust in the organization.

For the employee: it is the ideal moment to elevate the achievements and efforts of the year, receive recognition for their work, and express their point of view.

A lack of recognition and visibility can drive long-term disengagement. The annual review gives the employee space to discuss potential difficulties, needs (training, tools), and career aspirations.

Well run, it boosts engagement: more than half of employees appreciate this exchange when it is constructive. It is also an opportunity for the employee to give "upward" feedback on their work environment, team relationships, and management practices. A feedback loop that contributes to the organization's continuous improvement.

Read more: Employee disengagement: how to spot it and what to do about it

Do not confuse: the annual performance review is not an informal check-in or a weekly work meeting. Unlike the regular meetings between manager and employee that happen throughout the year, the annual review is a more structured, formal exercise — with broader perspective and often a written support document.

In France, there is also a distinct "professional interview" (entretien professionnel), which is legally mandatory every two years and focuses on the employee's long-term development (training, career progression). In Canada, there is no equivalent legal requirement, but many organizations run their own career development conversations alongside the annual review.

In France, note that the Labour Code does not mandate annual reviews. They are only obligatory if a collective agreement provides for them.

Regardless, organizations benefit from establishing this annual meeting given how rich in learning it is.

According to SHRM research, 93% of organizations conduct performance evaluations, and 71% of them do so on an annual rhythm.

A sign that, despite its critics, this practice remains preferred — provided you evolve it toward more quality and relevance.

What is the difference between the annual review and the professional interview?

While complementary, the two differ in their frameworks and objectives. A quick recap:

Annual performance review

Legal obligation: optional (unless required by a collective agreement or contract).

Objective: evaluate the past year's performance and set new short-term objectives.

Content: results, objectives achieved, skills, cross-feedback, operational action plan.

Follow-up: written summary recommended, often signed, without a mandated template.

Professional interview (France-specific)

Legal obligation: mandatory every 2 years in France (Law of March 5, 2014), with a full review every 6 years.

Objective: discuss growth prospects, training, and medium/long-term employability.

Content: career aspirations, growth projects, desired training, employee rights (CPF — Personal Training Account, VAE — Validation of Prior Experience).

Follow-up: mandatory formal summary given to the employee, with a full assessment every 6 years.

In short, the annual review evaluates past performance and sets short-term objectives; the professional interview (France) anticipates the career path and skills needed medium to long term.

While these interviews address different stakes, they are often run in sequence for coherence: one measures results, the other feeds professional development through an action plan or training program.

Read more: AI in the workplace: why HR teams are on the front line

How do you prepare for an annual performance review?

A successful annual review requires solid preparation upstream. On both sides — manager and employee — a quality exchange does not happen spontaneously. Each person needs to gather relevant information, think through the messages to deliver, and prepare the questions to raise.

What managers should prepare upstream

For the manager, dedicate time to preparation a few days before the review — following certain key steps:

Re-read previous review summaries and the employee's trajectory to verify the objectives set previously, the commitments each side made, and measure how far things have progressed. It is also worth revisiting the employee's résumé or file (tenure, role, changes) to reset their context.

Gather performance indicators (KPIs) for the employee over the period evaluated: sales numbers, activity reports, objective completion rates, client feedback, and so on.

For example, if a sales rep's objective was to sign 10 new contracts and they signed 8, that is a fact to discuss. If an important project was successfully delivered by the employee, having the results or associated feedback is critical.

Arriving with tangible elements avoids basing the evaluation on vague impressions.

Collect third-party feedback (if relevant) by asking other stakeholders who worked with the employee (colleagues, internal clients, partners).

For example, on a project manager who coordinates several teams, gathering the opinion of a few colleagues can enrich the evaluation.

Careful, though: stay factual and verify the relevance of the feedback (avoid getting trapped by the risk of hearsay).

Define a personalized conversation framework adapted to the employee's situation.

The review might start with a welcome and general overview, then move to discussion of results versus objectives, address skills (technical and behavioural), cover strengths and areas to improve, then invite the employee to speak, and so on.

Also plan time to discuss the future: upcoming objectives, growth aspirations, development plan.

This framework should match the person's role (you would not evaluate the same skills for a sales rep and a technician, for example) and their seniority.

For a new employee in their first year, the review might be more focused on integration and skill ramp-up than on hard numbers.

Prepare key messages and planned decisions. If you have an important announcement to make during the review (for example, the employee will not get the salary increase they hoped for, or on the contrary they are lined up for a promotion), you need to prepare how to phrase it constructively.

List 2 or 3 positive messages to deliver (thanks for a successful project, congratulations on a developed skill) along with 1 or 2 priority areas for improvement to discuss.

Practice phrasing them in a factual, caring way — as we will see in more detail later in this article.

A manager has the responsibility to arrive prepared and organized with a discussion plan, objective data, and a clear vision of the review's objectives. Everything counts for putting employees at ease and setting up a constructive exchange.

Employees can also self-evaluate

The annual review is not an oral exam the employee passively endures. It is their review as much as the manager's. The employee also benefits from preparing to get the most from this moment.

They also carry the responsibility of preparing by making sure to:

Take stock of their year a few days before the review — or throughout the year — and list their main achievements as well as the difficulties encountered.

Prepare their aspirations for the coming year. Expand responsibilities? Develop new skills? Pursue training? The annual review is the moment to raise these questions.

Prepare their key points and questions for their manager. Again — this is an interactive exchange. Each person should use it to raise their own questions and cover their important points.

Some organizations distribute self-evaluation forms. This can be an excellent exercise for the employee to prepare and structure their responses.

It also lets you identify potential gaps between the employee's perception and the manager's — gaps that can then be discussed in more depth during the review.

How do you structure an annual performance review?

On the day, once preparation is done, give the review a clear structure. A well-defined framework reassures, guides, and helps avoid missing any important topic.

Of course, the conversation should keep some spontaneity — but having a through-line helps hit the review's objectives.

The best framework to follow for a structured review

Phase 1: Review of the past year

This opens the review. The manager invites the employee to share their own reflection on the year:

"Tell me about your year in review."

The employee shares what stood out to them (successes, difficulties).

The manager completes with their evaluation: walk through the past year's objectives one by one, congratulating on those hit and analyzing those missed:

• What were the causes?
• What can we learn from the setbacks?

It is also about elevating the wins: the manager highlights the employee's achievements and strengths.

This review phase lets you start from concrete, shared elements before opening the discussion.

Phase 2: Constructive cross-feedback

This is the heart of the review — the two-way discussion. The manager shares structured feedback with the employee on their performance and skills: for example, by listing 2-3 satisfaction points (what worked well, progress made) and 2-3 areas for improvement. It should be factual and balanced.

Then the employee is encouraged to give their own feedback: how did they experience the year? Do they feel adequately supported by their supervisor and the organization? Do they have frustrations or improvement suggestions (about work methods, communication, and so on)?

This phase is valuable because — to repeat — the annual review is an exchange, not a manager monologue.

The discussion should unfold with a constructive mindset and mutual listening, even if disagreements can be expressed. The goal is that each person leaves with a clear understanding of the employee's strengths and areas for growth, and any adjustments needed to support their success.

Phase 3: Looking ahead — upcoming objectives

After turning the page on the past year, look to the future.

Manager and employee will define objectives together for the coming year. These objectives should be clear to everyone. A SMART base can help with clarity (Specific, Measurable, Achievable, Realistic, Time-bound). For example: "increase your conversion rate by 5% to help grow revenue by 10% versus the previous year" is more precise than "do more sales."

Also discuss the employee's development needs for hitting their objectives:

• What training or support would help?
• Should we plan mentorship, a certification, coaching on a specific skill?

This is also the moment to raise broader growth prospects:

• Does the employee have interests in internal mobility, a role change in the longer term?
• If yes, what intermediate steps to plan (acquire a specific skill, manage a cross-functional project, and so on)?

Phase 4: Summary and validation of shared understanding

Close the review by summarizing the decisions made and the commitments from each side: objectives validated, approved development actions, and optionally raise follow-up steps (for example: "we will do an informal check-in in 6 months to see progress").

This final phase is crucial so the employee leaves the review knowing where they are going and with what means.

Read more: Agentic AI for human resources: what opportunities?

How do you ensure the review runs well?

Solid preparation and a clear pre-set framework launch things on excellent foundations. But that is not everything.

The success of the review depends most on the behaviour of the two people during the meeting and the communication that sets in. Again, the manager is responsible for creating a climate of trust and should remember that certain behavioural mistakes can derail the meeting. Better to know them to avoid them.

Communication techniques to adopt

Adopt a neutral, caring posture and approach the review with an open mindset, without negative preconceptions.

A neutral posture means avoiding any condescending attitude or, on the contrary, being too familiar — creating a reassuring framework: courteous welcome, calm tone, open body language (eye contact, smile, nods). The employee should feel respected and treated as a discussion partner, not as an accused in front of a tribunal.

Practise active listening — the annual review is not a manager monologue. Show that you are actually listening, respond to what the employee says, ask clarifying questions:

"Can you tell me more about the difficulty you mention?"

Everything counts to encourage the employee to speak freely.

Base yourself on concrete facts when giving your assessment.

Rather than saying "You do not have a good team spirit," which is vague and judges the person, it is better to refer to a fact: "During project X, I observed that you tended to move forward alone without communicating progress to the others. As a result, the team was under-informed."

From there, you can discuss an improvement:

"How could we better share information going forward?"

Same for compliments:

"You handled the Y file very well — the client sent a congratulatory email" is more impactful than "You are super professional!"

The concrete makes feedback more credible and more acceptable.

Manage emotions and tensions. An annual review can sometimes get emotional (employee frustration, disagreement on the evaluation, and so on). The manager should stay calm and play a regulating role.

The important thing is to stay respectful and constructive throughout. If the employee expresses dissatisfaction, the manager should avoid getting defensive.

Master the time so you can address all the planned points without rushing. If a topic drags on, proposing to handle it in more detail later can be wise.

At the end of the review, always summarize the key points and decisions made — to make sure everyone is aligned.

Close on an encouraging note by thanking the employee for the exchange, reaffirming confidence in their ability to hit the new objectives, and so on. The employee should leave the review knowing what they did well, what they can improve, and motivated for what comes next.

Mistakes to avoid

Even with good intentions, certain behaviours or oversights can erase the benefits of an annual review.

Here are three common mistakes to absolutely avoid as a manager:

Running a one-way review — going through your evaluation without letting the employee speak — misses the whole point of the exercise. A monologue review where the employee just nods along often generates frustration and disengagement.

At the extreme, Gartner research has shown that 59% of employees believe traditional performance evaluations have no impact on their personal performance — particularly when the process is too top-down and not constructive enough.

Delivering vague or biased judgments. "You have a bad attitude," "You are excellent, keep it up."

Vague, unsupported judgments leave the employee puzzled: what exactly did they do right or wrong? What criteria back this judgment? It is imperative to specify the facts, behaviours, and results that motivate the evaluation.

Watch out for biases too. A manager can be influenced by the most recent performance or by their subjectivity.

For example, not mentioning a problem because you like the person, or on the contrary painting a darker picture for an employee you get along with less well.

Or worse — comparing to colleagues: "She manages it fine!" — creating a sense of unfounded competition inside the team.

Stay as factual and objective as possible.

Forgetting the development plan and rushing the end of the review. This is a major miss: the employee leaves with just a rating, but no vision of improvement or growth. This can be very demoralizing, especially if the evaluation includes negative points.

If gaps have been identified, propose solutions (training, coaching, mentoring).

If ambitions have been expressed, do not sidestep them. Even if you cannot promise a promotion right away, show that you heard and will think about it with HR.

If ambitious objectives are set, make sure to plan check-in points during the year. An annual review without follow-up is emptied of its substance.

Read more: What AI should NOT do for your HR

What do you do after the annual review?

Formalize the meeting and document the exchange

There are several advantages — some not obvious at first — to keeping a written record of the annual review.

Clarify and record in writing the points discussed, the decisions made, and the objectives set to serve as a reference for the manager and the employee.

Both should have access to it to make sure they are on the same wavelength.

Mutually commit by signing the summary.

This does not turn the evaluation into a contract set in stone — it means each person acknowledges having seen the elements discussed. If the employee disagrees with certain points of the evaluation, they have the right to mention it in the document or refuse to sign — but this will leave a trace of their disagreement.

In any case, the signature attests that the review actually happened and both parties were able to speak.

Annual review summaries are extremely useful for HR decisions — they are a gold mine of information.

They let HR identify trends emerging across different reviews, for example.

The summary can serve as a base for evaluating an employee's eligibility for a raise or a role change, alongside other criteria.

Ensuring good follow-up on the objectives set

One risk to avoid after an annual review: falling back into the routine cadence of manager-employee collaboration and only pulling out the summary at the dawn of the next review — a year later.

To avoid this, put a follow-up plan in place at the end of the review:

Schedule intermediate check-ins to track the progression of the important objectives defined throughout the year.

Check-ins that let all parties stay invested, avoid bad surprises, and answer the important questions:

• Are we on track to hit the annual objective?
• Are there unexpected obstacles?
• Should we adjust something (resources, deadlines)?

Support the development actions — if the plan includes concrete steps (training, mentorship, taking on responsibility, and so on), the manager and HR are responsible for making sure the commitments are followed through.

Use dedicated follow-up tools that streamline the tracking of reviews and objectives.

The SIGMA-HR talent management solution, for example, streamlines scheduling of reviews based on everyone's calendar, automates communications, keeps clear tracking of the objectives set, centralizes summaries, and more.

The tool lets everyone (employee, manager, HR) keep an overview of agreements for stronger follow-up discipline and easier use of data at the global level.

Empower the employee to get involved in follow-up on their annual review.

You can encourage them to keep updated a document or personal dashboard of their progress against their objectives — one they can share during the intermediate check-ins.

This empowerment reinforces engagement from all stakeholders.

The company FMGC (a 420-employee foundry) structured its annual review campaigns with SIGMA-HR. Céline Richard, HR Development Manager, explains:

BONUS: Sample questions to fuel a quality exchange

The quality of an evaluation review depends largely on the questions asked by the manager (and the answers given by the employee).

To invite the employee to speak freely and get rich answers, use open-ended questions to prompt reflection. For example:

• "What are the achievements or projects you are most proud of this year, and why?"

This positive question lets the employee showcase their successes and lets the manager concretely acknowledge their contributions.

• "What were your main difficulties over the period, and what did you put in place to try to overcome them?"

This opens the exchange on improvement points without accusing — focusing on problem-solving and potential support.

• "How do you evaluate the quality of our collaboration and the work environment day to day? Are there things you see to improve?"

This kind of question encourages the employee to give the manager retrospective feedback (on their management style, communication) and to express their overall feelings (team, workload, work-life balance).

• "What skills would you like to develop, or what new challenges would you like to take on next year?"

This question orients the review toward the future and the employee's wishes — which is motivating. You can follow with training or missions of interest to them.

• "In your view, what objectives should we set for next year? What means or support will you need to hit them?"

Involving the employee in defining objectives strengthens their buy-in — and asking about needed means shows the manager is positioning as a facilitator of their success.

WATCH FOR PITFALLS! Certain phrasings should be avoided to keep the exchange open and not put your interlocutor on the defensive.

For example, avoid closed questions like "How is it going?", "Did you have problems?" that get minimalist answers.

Also avoid loaded or accusatory phrasings: "Why did you not hit all your objectives?" (felt as a reproach) or "You realize your attitude is not acceptable, right?" (value judgment).

Remember: neutral, positive phrasing wins. If a negative point has to be raised, present it as an improvement opportunity rather than a fault.

For example, instead of "You lack organization," you could ask "Do you think you would need tools or methods to organize yourself better on certain projects?"

This approach leads the employee to analyze the situation without feeling personally attacked — and to co-build solutions.

In short, favour listening and care in your questions, and ban loaded interrogations.

To go further

• Case study: Artopex shifts to strategic talent management with SIGMA-HR
• Offboarding: A Guide to a Successful Departure Process
• HR statistics: key figures for 2026
• By 2030, HR will no longer do the same job