Why Performance Reviews Are Important

What’s the deal with performance reviews?

As a business owner, you understand the importance of recruiting the best staff. As a leader, you want your team to perform at their highest level. Many of you likely use performance reviews to evaluate your employees’ work, efficiency, and morale on a quarterly or annual basis. If you’re unsure about what performance reviews entail, don’t worry; we have you covered.

Performance reviews are routine evaluations where an employee’s performance is documented and communicated to them. This can be done either through a physical document provided to the employee or during a one-on-one discussion. Performance reviews can be conducted daily, weekly, quarterly, or even annually.

You may be wondering why they are so important…

Performance reviews serve various purposes and provide benefits for both employers and employees. Therefore, it’s a best practice to implement a review process if one is not already in place. Consider these reviews similar to customer satisfaction surveys often given by retail stores or after receiving support from a company. These surveys effectively communicate areas where individuals excel and where improvements can be made.

To maximize an employee’s performance, it’s essential to clearly outline expectations beforehand. Before conducting a performance review, it’s fair to provide the employee with a list of expected tasks or skills they should complete or develop.

So, why give reviews?

For Promotion: Performance reviews provide both you and the employee with a clear view of their improvement compared to earlier evaluations. These reviews also help determine whether an employee is ready to take on more responsibilities. When multiple candidates are vying for a promotion but only one position is available, a supervisor must support their choice with specific examples of outstanding professional achievements. Keeping thorough documentation allows for physical evidence to substantiate these claims, so be sure to maintain accurate records of your reviews.
For Compensation: Many employers base compensation decisions on employee merit and the company’s financial performance. Evaluations assess whether an employee is deserving of a salary increase based on their performance and tenure. This process also indicates whether key milestones have been met to warrant a bonus. An employee’s performance should be the key factor in determining their compensation. Good work deserves recognition, and receiving rewards for it fosters a positive feeling.
For Training: Performance reviews can highlight skill gaps and indicate where a staff member may benefit from additional training. They also allow employees to identify relevant classes that could prepare them for greater responsibilities. To enhance the review process, management can show employees the skills and training typically required for similar roles in the industry, helping them understand the job “norms.” When management supports employees in reaching their best, it boosts overall company morale.
For Discipline: Performance appraisals create a valid paper trail that supports administrative and legal processes in cases of employee negligence, harassment, or other serious behavior. Written documentation is usually more effective than verbal communication when addressing issues of poor performance. Conversations about underperformance can be uncomfortable for both parties, so having a structured approach and supporting evidence makes the process much smoother.

Now, what?

Providing feedback to employees about their strengths and weaknesses is crucial for helping them understand how to best utilize their interests and talents to benefit the company. Employee performance reviews are an effective way to ensure that both you and your employees share the same understanding of their performance. Additionally, by highlighting areas for improvement, you offer valuable feedback that can significantly enhance their performance.

Published under

Leadership/Management

What’s the deal with performance reviews?

You may be wondering why they are so important…

So, why give reviews?

Now, what?

Related Articles

Creating an Employee Recognition Program

The Best Boss: What Your Employees Want From You

How to Encourage Creativity in Employees