Annual performance reviews are a fixture in many Latvian companies, but new data suggests this practice isn’t universal. A significant portion of organizations either don’t conduct annual reviews at all, or only do so with a subset of their employees. According to a recent survey by Kantar, 44% of Latvian employees report not receiving regular annual performance reviews with their managers.
The lack of consistent evaluation extends beyond the absence of formal reviews. Approximately one-third of Latvian employees indicate they don’t receive constructive feedback on a day-to-day basis – neither when their work is well done, nor when improvements are needed. This suggests a broader issue with ongoing communication and performance management within Latvian businesses.
While annual reviews aren’t a panacea, they serve as a crucial checkpoint for setting new cycles, evaluating past performance, and agreeing on future direction, including opportunities for growth and development. Without regular dialogue between managers and employees, annual reviews risk losing their value. In such cases, they become akin to attempting to repair a relationship with a single conversation each year – a task that is inherently limited.
Employees respond more favorably to feedback that is structured and regular, rather than a generalized assessment once a year. Frequent communication allows for timely course correction and avoids unwelcome surprises during annual reviews. This fosters trust, openness, and strengthens collaboration between managers and their teams. Effective managers utilize annual reviews as a logical summary of discussions held throughout the year, reducing stress for both parties and making the conversation more meaningful.
The stress associated with traditional performance reviews is not insignificant. A U.S. Survey revealed that 34% of millennials reported being reduced to tears due to the stress and emotional pressure of annual performance evaluations.
Academic research and organizational experience consistently demonstrate that performance evaluation is a key driver of employee motivation. The clearer, fairer, and more respectful the conversation about performance, the greater the employee’s engagement and desire for development.
Crucially, these conversations should be two-way. Employees should have the opportunity to share their perspectives – how they view the past year, what succeeded, what was challenging, and how the collaboration with their manager and colleagues unfolded. This aspect of the conversation is often decisive, as surveys by PwC and Gallup indicate that employees are more likely to leave a job due to feeling unheard and unappreciated than because of compensation issues.
Annual reviews should conclude with clarity and confidence. Employees should leave the conversation feeling they understand their path forward, know what is expected of them, have support, and that their contributions are recognized. This approach – where annual reviews are integrated into a continuous cycle of quality daily communication – builds strong teams and, successful organizations.
The findings in Latvia echo a broader global conversation about the effectiveness of traditional performance review systems. , Forbes published an article questioning the value of annual reviews, arguing they “burn time, drag down performance, demoralize teams, and bog companies in slow processes.” This sentiment suggests a growing recognition that more frequent, informal feedback mechanisms may be more effective in driving employee performance and engagement.
The Latvian context also highlights a potential gap in diversity and inclusion efforts. A study examining performance evaluation practices in Latvia and Lithuania found that diversity and inclusion are often not considered within the performance evaluation process. The study specifically noted that Here’s particularly evident in Latvia, where approximately two-thirds of respondents do not view diversity and inclusiveness as important components of performance evaluations. This suggests a missed opportunity to integrate these critical values into performance management systems.
While KPMG is exploring the use of AI in performance reviews, as reported by , the fundamental need for clear communication and constructive feedback remains. The integration of AI tools may offer efficiencies, but it cannot replace the human element of understanding individual contributions and fostering a supportive work environment. The focus should remain on creating a culture of continuous feedback and development, where employees feel valued and empowered to succeed.
The recent announcement of minimum salary changes in Latvia, as reported by Fragomen, further underscores the importance of fair and transparent performance evaluations. Ensuring that compensation is aligned with performance and market value is crucial for attracting and retaining talent, and a robust performance management system is essential for achieving this goal.
