Rethinking the annual performance appraisal: practical strategies for NFP leaders

The traditional annual performance appraisal has long been a cornerstone of HR. Yet in today’s fast-changing care and community services landscape, it no longer delivers the impact it once promised. Leaders across the not-for-profit sector are recognising that once-a-year reviews often fail to keep pace with workforce needs, regulatory changes, and evolving client expectations.

This article outlines why annual appraisals need a rethink—and explores what a more modern, engaging performance management model could look like for organisations in aged care, disability support, and other frontline services.

Why annual performance reviews fall short

Annual performance appraisals tend to focus on the past rather than what’s needed now and next. In an environment where client expectations are rising and workforce retention is a daily challenge, outdated performance models can become little more than a compliance-driven tick-box exercise.

For care providers, this presents a real risk. Key performance conversations are delayed, issues go unaddressed, and staff miss out on the meaningful development and recognition that drive morale and engagement.

Why annual performance reviews matters for care sector organisations

In the not-for-profit and care sector, the consequences of ineffective performance management go beyond HR. Poor engagement, high turnover, and missed compliance requirements can all stem from infrequent or inadequate feedback processes.

• Workforce shortages are pushing organisations to get better at retaining and growing their teams internally.

• Regulatory expectations, such as the Aged Care Quality Standards, require documented and ongoing staff development.

• Consumer-centred care demands employees who are agile, well-supported, and empowered to adapt in real time.

In short, the sector needs performance systems that support both compliance and connection.

Four practical ways to evolve your performance appraisal process

Shifting away from the traditional annual review doesn’t mean removing structure or accountability. Instead, it’s about building a system that supports your people year-round while meeting audit and quality standards. Here’s how you can modernise your approach:

1. Adopt a hybrid performance model

Instead of completely discarding annual performance reviews, adopt a hybrid model that combines frequent, development-oriented feedback with streamlined annual assessments. This approach can:  

• Meet documentation requirements for compliance (e.g., under the Aged Care Quality Standards).  

• Empower employees by focusing on continuous growth and real-time adjustments.  

• Ensure feedback isn’t a once a done annual exercise, but instead is a model that allows regular continuous feedback cycles.  Employees do not need to wait a year to understand how their performance is tracking. 

Combine annual reviews with regular development check-ins to meet compliance requirements while staying responsive to team needs.

• Keep the formal review for documentation and planning, ensuring alignment with performance management obligations under Fair Work guidance.

• Use frequent feedback sessions to support real-time growth and adjustments.

• Allow staff to track their progress throughout the year, not just once annually.

2. Leverage digital tools for smarter tracking

Digital platforms streamline feedback and enable consistency, especially for dispersed or mobile teams.

• Automate goal tracking and competency reviews.

• Ensure up-to-date documentation is always available for audits.

• Free up time for managers to focus on coaching, not admin.

3. Make monthly one-on-ones the norm

Short, structured monthly conversations help managers address challenges before they grow.

• Tie feedback to day-to-day care scenarios and challenges.

• Align personal and team goals with broader service outcomes.

• Recognise wins early to reduce burnout and improve retention.

4. Co-design with your team

Change management begins with engaging your workforce. Collaborative processes increase employee buy-in and sustainability. Effective change starts with involvement.

• Host workshops or focus groups to understand current pain points.

• Invite staff to co-create success metrics that reflect care quality and client satisfaction.

• Boost buy-in and long-term adoption by making staff part of the solution.

How Anson can support your performance management evolution

Anson Consulting works closely with care and community sector leaders to review and strengthen performance systems. From policy redesign to team coaching and digital implementation, we help organisations create sustainable performance frameworks that drive both compliance and culture.

Key takeaways

• Annual performance appraisals alone are no longer enough.

• Regular, real-time feedback better supports staff growth and engagement.

• Hybrid models offer a balance between compliance and culture.

• Co-design and digital tools make change stick.

• The right performance strategy can reduce turnover and improve service quality.

Frequently asked questions

1. What’s wrong with sticking to annual reviews?

   They often delay feedback, miss timely coaching moments, and fail to reflect evolving staff or service needs.

2. Will frequent check-ins add more admin for managers?

   Not if done right. With digital tools and short formats, ongoing conversations can reduce time spent on remediation and documentation.

3. Is this relevant to small providers too?

   Absolutely. Smaller teams often benefit even more from regular feedback and simplified systems that keep everyone aligned.

Ready to modernise your performance process?

If your current appraisal system isn’t delivering results, it’s time to evolve. We help organisations across the care sector design practical, modern feedback systems that empower staff, reduce turnover, and align with sector standards.

Speak to Anson Consulting today to explore how we can support your team.