Are performance reviews effective?

Recently more and more companies are drastically reframing or ditching their annual performance rating process altogether. That's because people are dynamic and a single, standard review process cannot accurately encompass every employee’s achievements.

Employees’ skills and development needs are constantly evolving due to personal factors and external influences. Given this, assigning a static rating annually based on the prior twelve months of work doesn’t make much sense. If anything, that annual rating may oftentimes serve to disincentivize employees.