The Importance of Performance Reviews

The Importance of Performance Reviews

Let’s start off by understanding what actually is a performance review (or performance appraisal)?

A performance review is a formal meeting between an employee and their manager.  During this meeting both parties provide feedback, discuss achievements and development areas. 

Performance reviews can be often of time of anxiety for the employee and time consuming, and costly for the employer. So why do them?

Well, when a performance review is done correctly it can bring the best out of your staff.  It offers growth, recognition, and the opportunity for real development.  It provides the employer the opportunity to discuss with the employee how they are tracking, give feedback, offer support, guidance etc.

Acknowledgement and constructive criticism help motivate and engage employees.  By reviewing the performance of your staff members at periodic intervals, they will gain greater understanding of how their position contributes to the goals of the company and likely to become more invested in the outcome.  According to Jim Hartner, PhD, chief scientist of employee engagement and wellbeing at Gallup, “Engaged employees are thinking about the whole Company and how they fit into it, and their ideas lead to better decisions.”

Performance reviews also helps with a reduction in employee turnover.  SHRM (The Society for Human Resource Management), estimated the average cost of hiring a new employee for a mid-level position is 20 percent of the annual salary. 

A key consideration

Performance reviews include behaviours and attitude as well as the actual technicalities or tasks of any given position such as whether or not reports are filed on time, or projects were completed within budget. How an employee engages themselves in the workplace – are they a team player? do they arrive to work on time? are also considerations to be included in a review. Poor performance can then be monitored and managed as ignoring it can lead to a decrease in team moral and bad culture. And a business with a bad culture can lead to high turnover, and make employing and keeping good staff very difficult.

So how often should performance reviews be conducted?

While the general rule appears to be that reviews are conducted annually, it is always best to conduct reviews quarterly or biannually.  Especially if you do not meet with your staff regularly.  You don’t want them to be surprised by the outcome of the review if you are not discussing progress/performance for the entire year.  If an employee has not been performing at the desired level and you have not communicated this throughout the year, it can come as be a big shock come review time.  If you have quarterly meetings, for example, you can track where an employee is against their goals and support them in reaching or exceeding those goals.

How should you prepare for performance reviews?

Regardless if the performance review is casual or formal, it is always best for both parties to prepare themselves for the conversation.

Some helpful tips for preparation include:

Prepare notes – both parties should be encouraged to make notes prior to meeting.  This will assist with keeping the meeting on track and giving meaningful feedback. Many businesses have a set template of questions that are sent to the employee prior to the meeting whereby the employee can answer the questions, make notes or “rank” themselves in order of how they perceive their performance to be.*

Have examples ready – you should be able to provide examples for the feedback you are providing.  Reflect on how the employee has achieved/not achieved their set goals for the year.

Questions – always come with questions.  This is a safe environment so make the most of your time together.

Things you should avoid in a performance review

Feedback without example – An example can help employees better their performance rather than feeling defensive. Make it very clear and indicate how the situation could have been handled better so the employee understands not just the area where their performance maybe under par, but that they have resources and tools to handle things better.

Comparing to other employees – Focus solely on the performance you are evaluating. This is not a personal issue, it is purely about the role the individual is doing and how they are doing that role.

The same old story – try not to give the same feedback each review.  Therefore, it is always a good idea to take notes. If however, you are looking at the same areas that are not improving, then it could be time to look at either further training, or maybe even a performance management plan – especially if the areas raised are around behaviours rather than skills.

It is proven that there is real value in performance reviews when done correctly, to ensure tasks and duties are carried out in accordance to job descriptions, that any workloads that an employee struggles with are discussed and supported, and that behaviour and attitude are also accounted for.

HR Central can provide you with performance review guidelines and suggestions plus if you subscribe you will have tailored templates* per either employee or position.

Call HR central on 1300 717 721 or contact us via our website :

Natalie Bol

Natalie is one of HR Centrals HR specialists. With over a decade of HR experience, she is a true generalist with a strong IR slant. Natalie enjoys working across many aspects of HR including compliance, IR, HR skills training and performance management. Natalie holds a Graduate Diploma of Commerce in HR Management from Swinburne University and is a member of AHRI.

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