Annual Reviews Aren’t the Problem. How We Use Them Is.

Mitchell Jeffery
Jan 9
4 min read

In healthcare and behavioral health, annual performance reviews are not a “nice to have.”

They are a requirement.

Accrediting bodies like Joint Commission, along with state licensing agencies, expect organizations to formally evaluate employee performance on a regular basis. Reviews must be documented, consistent, and defensible. They are often reviewed during surveys and investigations and can become critical records in employee relations, corrective action, and termination decisions.

In other words, annual reviews exist to protect patients, organizations, and employees alike.

So when leaders say, “We should just get rid of annual reviews,” the answer is simple: you can’t.

But here’s the real opportunity most organizations miss.

Compliance tells us that reviews must exist. It says nothing about how disconnected, rushed, or ineffective they need to be.

The Real Problem With Annual Reviews

The issue in healthcare and behavioral health isn’t that performance reviews are required. It’s that over time, they’ve become overly focused on scoring instead of understanding.

Most reviews today suffer from the same flaws:

They are completed once a year and treated as an administrative task
Managers rely heavily on recent memory rather than a full year of performance
Rankings are emphasized without meaningful dialogue
Employees leave the conversation feeling judged, not understood

In fast-paced, high-burnout environments, reviews often become backward-looking scorecards instead of forward-looking conversations. Managers scramble to remember what happened months ago. Employees brace themselves for ratings that may feel arbitrary or unexplained.

The result is predictable: disengagement, frustration, and a missed opportunity to influence retention.

The problem isn’t that reviews include rankings.The problem is that rankings have replaced relationships.

Why Reviews Quietly Undermine Retention

For many employees, the annual review is the only formal conversation they have all year about how they’re doing, how they’re valued, and where they’re going.

When that conversation focuses primarily on numbers, labels, or vague feedback, employees don’t walk away motivated. They walk away questioning:

Whether their contributions are actually seen
Whether their role matches what they were promised
Whether staying another year makes sense

This is especially risky in behavioral health and healthcare, where burnout, emotional labor, and turnover are already high.

Which leads to a better question.

What If Annual Reviews Functioned as Stay Interviews?

Instead of treating annual reviews as backward-looking evaluations, what if they were designed to answer the question that actually drives retention?

What keeps this person here — and what might push them out?

That’s the foundation of the stay interview, popularized by The Stay Interview, and it’s a framework that fits cleanly inside a compliant review process.

You don’t eliminate rankings.You don’t abandon documentation.You simply change what the conversation is for.

The review becomes not just an assessment of past performance, but a structured dialogue about engagement, expectations, and long-term commitment.

A Practical, Compliant Hybrid Model

This approach respects regulatory requirements while making reviews more human and more useful.

It starts by keeping formal rankings short and focused. Instead of dozens of criteria, limit ratings to five to seven areas tied directly to company values and core role expectations.

Use a consistent scale and invite employees to rate themselves first.

That self-reflection alone shifts the tone. Employees arrive thoughtful instead of defensive.

Managers gain insight before the conversation even begins.

After rankings, the review shifts into written responses that facilitate real dialogue:

What originally drew the employee to the role
What energizes them today and what drains them
Whether the job matches what they expected when hired
What would make them want to stay longer

These questions don’t weaken accountability. They strengthen it by adding context and meaning to performance feedback.

The Pay-for-Performance Tension Beneath the Surface

Many organizations hesitate to shift their review process because compensation is tied to scores.

Pay-for-performance philosophies assume objectivity, but in reality, most evaluations are influenced by recency bias. Managers remember the last quarter or the last major issue — not the full year of contributions.

That means many “annual” reviews are actually ninety-day snapshots. When raises are tied to those snapshots, resentment quietly follows, especially when similar employees receive different outcomes.

This is a deeper conversation — and one worth having separately. We’ll explore alternatives to pay-for-performance in a future post.

Why This Model Actually Improves Retention

When annual reviews function partially as stay interviews, something important changes.

Employees feel heard rather than scored. Managers gain insight that they can act on.

Retention risks surface earlier, trust deepens, even when feedback is difficult.

This model doesn’t remove structure. It restores purpose.

The Hard Part Leaders Have to Accept

Sometimes employees will say things managers don’t want to hear.

If a manager feels a sharp internal reaction — defensiveness, frustration, or dismissal — that moment deserves reflection. Why did this land so strongly? Is it possible there’s truth in what was shared?

Those visceral reactions are often signals, not threats. Leaders who can pause instead of react grow faster than those who explain feedback away.