AI‑driven performance review firm’s CEO says annual appraisals are ill‑suited to the AI era: ‘The practice hasn’t kept up’

(SeaPRwire) –   For most employees today, the yearly performance evaluation is a feared routine, characterized by administrative tasks and a difficult discussion.

David Hassell, the CEO of the AI-driven performance management company 15Five, contends that this widespread dissatisfaction stems from a systemic flaw, one that has become outdated in a time of rapid technological advancement. Speaking at the Workplace Innovation Summit, Hassell described the conventional review framework as a holdover from a less technologically dynamic period.

“Annual assessments were logical in a relatively unchanging world,” he stated. “We are now in an era of accelerating technology and transformation, and the practice has failed to evolve accordingly.”

Despite being both feared and antiquated, the annual performance review remains a tool many companies use to address promotions or performance concerns. However, most chief human resources officers lack faith in the efficacy of these reviews. A 2024 Gallup survey revealed that only 2% of 500 CHROs strongly agree that their performance management system motivates their staff to get better.

A ‘backward-looking’ process

Hassell identifies the review frequency as a core issue. Delaying a full year to tackle performance problems or discuss a salary increase places employees and managers in an uncertain situation. Yet, because the procedure is so burdensome—demanding that managers collect input, record performance, and file official evaluations—most companies settle for once a year. Research indicates that even with only an annual review, managers can devote 210 hours per year to performance management, a significant amount of time that could be redirected to more urgent duties.

Furthermore, Hassell maintains that the annual review is ineffective. The majority are retrospective, offering minimal assistance to employees aiming for professional development.

“If you only discuss an event from three or four months prior once per year, you won’t truly be able to support that individual’s growth,” he explained.

Specialists have been highlighting the deficiencies of the annual performance review for years. In a 2024 interview, Dan Kaplan, a senior CHRO client partner at the consultancy Korn Ferry, remarked that reviews are conducted yearly because “it’s the traditional method.” He continued, “Many top-tier companies have been working to implement ongoing feedback.”

Hassell believes a simpler, more regular method could reduce the discomfort and dissatisfaction associated with the process. He observed that some of his clients perform reviews up to four times annually. Although he does not advise such a high frequency for all businesses, he recommends increasing it from the standard once a year. He said at least two reviews annually, combined with a system of consistent weekly feedback, suits the operations of most organizations.

He is confident that technology can equip managers with the necessary data for constructive coaching dialogues with staff, shifting the focus from administrative duties to fostering employee development. Essentially, AI has the potential to eliminate the repetitive tasks from the review process, freeing up hundreds of hours for managers each year. He added that this method makes reviews more prospective, removing the anxiety typically felt before meeting with a supervisor.

“The review meeting should never contain surprises,” he said. “That session should involve recording what has happened, but the entire process should be oriented toward what comes next.”