Annual reviews have many problems, the main one being that the incentives behind them are usually flawed. In many cases, these reviews exist because management

Annual reviews have many problems, the main one being that the incentives behind them are usually flawed. In many cases, these reviews exist because management believes it needs them. That doesn't mean that said management will actually take said reviews seriously. Once the review has occurred, the job of the review is done, which is to say that management or the business owners succeeded in making themselves feel as if they have done their job and have created a pathway to greater excellence by providing feedback to their employees. It doesn't matter how vacuous these reviews are; just pretend like they're better than nothing, and you can feel good about yourself. If all else fails, you, the manager, will maintain your sense of superiority. From the employee's perspective, there's usually little reason to take annual reviews seriously. The fact that they are annual and not more frequent subtly communicates that any negative (or even positive) feedback really is not that important, if at all, and savvy employees who care about maximizing their earnings should consider whether it's worth investing effort into "improving" when said improvement is unlikely to translate into a bigger paycheck or a fancier title. Some companies try to counter this by having employees self-review, but this backfires in a number of ways. For one, employees are incentivized to either exaggerate or downplay their strengths and shortcomings. "Always room for improvement", right? If an employee legitimately can't think of anything they need to improve upon, they're liable to make something up just so they don't stick out like a sore thumb. One way that this system does work out for employers is that it can encourage less savvy employees to work harder than they did before but for the same pay, but this may also cause burnout and higher turnover when these peons realize their station at the company and move on to better things. In rare cases, annual reviews can be used in an effort to get rid of poor-performing employees. This is not as common as people think, and is even less common the bigger the company gets. Businesses want to maximize productivity, but that doesn't mean they care enough to outright fire the mediocre or even lazy employees. Mediocrity can actually work in the favor of the business because, if such mediocrity is permitted, they can hang on to employees longer than if they demanded the kind of extraordinary excellence they claim to in job ads. "We only hire the best." No, you don't.