As organizations gear up for another performance review cycle, a crucial gap becomes clear: despite spending billions annually on management training, organizations still put managers in high-stakes performance conversations with little opportunity to practice. This ‘practice paradox’ highlights how unprepared managers are for one of their most important responsibilities.
While in the best-case scenario, feedback has been an ongoing conversation through the year. Too often, the annual review model is just that, annual – Asking managers to synthesize months of performance data and deliver meaningful feedback in high-pressure conversations that happen just once a year. These intensive conversations are rife with biases that can curb an individual’s career ambitions, damaging their engagement and willingness to stay at their organization.
And the stakes keep rising. With employee engagement at historic lows and intent to leave at a record high, organizations can’t afford to maintain outdated performance practices. Annual feedback cycles are too slow and cumbersome for organizations that need to adapt quickly. The impact is clear: only 2 in 10 employees feel that performance management motivates them to do their best work – a stark indictment of the traditional annual review approach.
While performance reviews present challenges in any work environment, the complexity increases for hybrid and remote teams where managers must navigate feedback across different working models and cultures. AI tools now make this transformation within reach, giving organizations the means to move beyond outdated annual review cycles toward more meaningful, ongoing performance discussions that drive career growth and company success.
Breaking the Feedback Barrier
A staggering 70% of managers are uncomfortable giving feedback to employees. This discomfort is magnified by the high-stakes nature of annual reviews, where managers must deliver months of accumulated feedback in a single conversation. When managers lack confidence in these crucial conversations, they often delay or avoid feedback entirely, creating a cascade effect that impacts team performance and morale.
AI-powered practice environments are changing this dynamic by providing safe spaces for managers to develop their skills. Unlike traditional role-playing or training videos, these solutions offer immediate, fact-based feedback on how to improve their message, understand their team members’ perspectives, and coach in difficult times. These tools have the power to help managers understand how their language choices and conversation flow affect their message. Through dedicated practice, managers develop the confidence and competence needed for meaningful performance conversations. This skill set proves especially critical for fostering inclusion and team success.
Building Better Teams Through Inclusive Leadership
Insights from Deloitte demonstrate that inclusive cultures translate into value: Organizations with inclusive cultures are twice as likely to meet or exceed financial targets, three times more likely to be high-performing, six times more likely to be innovative and agile, and eight times more likely to achieve better business outcomes.
Poor manager preparation and outdated review processes pose particular challenges for inclusive leadership. Effective inclusive leadership in performance conversations goes beyond basic feedback delivery. It requires managers to build psychological safety, ensure consistent evaluation standards, and maintain awareness of potential biases that could affect their assessments.
The infrequent touchpoints of annual reviews make it harder to build trust and psychological safety. AI practice tools help by providing structured approaches to these challenges, allowing managers to develop and refine their inclusive leadership skills through repetition and feedback.
Through consistent practice, managers develop not just confidence, but the ability to recognize and adapt to different working styles and communication preferences across their teams. This adaptability drives innovation and agility, essential in today’s diverse workplace, where one-size-fits-all approaches to feedback often fall short.
Building a Culture of Continuous Feedback
Annual reviews, which compress a year’s worth of feedback into a single conversation and focus on backward-looking assessments, fail to match how modern teams work and develop. When managers become confident in their ability to deliver feedback through consistent practice, they naturally move beyond these constraints toward a more effective performance management approach.
Technology plays a crucial role in this evolution. AI-enabled tools help managers deliver more frequent feedback and fundamentally rethink how performance conversations happen. Rather than saving feedback for annual reviews, managers can identify coaching moments in real time and create ongoing dialogues about growth and development.
This transformation delivers measurable benefits: Teams demonstrate higher engagement and innovation, with employees more likely to contribute ideas and take positive risks. Career conversations become more frequent and substantive, initiated by both managers and employees. Most importantly, the focus shifts from annual evaluation to continuous partnership, creating an environment where both individuals and organizations can rapidly adapt and grow.
The Future of Performance Management: Deeply Human and Tech-Enabled
While some traditional review touchpoints will remain valuable for goal setting and career planning, career and business success requires continuous, meaningful feedback enabled by technology but driven by human connection.
AI will continue to evolve as a powerful enabler, helping managers not just prepare for conversations, but fundamentally transform how they approach performance management and employee development. However, the core of performance management remains fundamentally human – the ability to build trust, understand individual motivations, and guide development in meaningful ways.
Organizations that successfully blend AI-enabled practice and personalized coaching with human-centered leadership approaches will create environments where feedback flows naturally and continuously, driving both individual growth and business success. This transformation isn’t just about making annual reviews less painful — it’s about creating the agile, inclusive, and high-performing cultures that modern businesses need to thrive.
Elise Smith is co-founder and CEO of Praxis Labs.
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