Performance Reviews Series: What are they and why are they important?

Many people view a performance review as a yearly tick box exercise that is completed without much interest or enthusiasm. This could be because managers don’t have the time, or simply don’t value the importance of them. However, if performance reviews are done frequently and effectively, they can be a real investment for your business. Isobel explains.

By Isobel Hallam

What is a performance review?

A performance review is where a line manager looks back over a certain time period to review and discuss their employees’ performance. A lot of businesses traditionally see this as a yearly task, and whilst having a yearly roundup can be beneficial, performance should be monitored and managed much more frequently!

Different formats

First, you need to ensure you decide on the purpose of the performance review. There are a wide range of different performance reviews. It’s important that you consider the culture of your business when deciding what the best review process is for you. It should not try to be everything, otherwise it’s certain to fail! The first choice is whether the review is going to be a developmental exercise or purely an administrative one. Here’s the difference:

Developmental – Focuses on the employee and looks to the future. It identifies the areas they want to improve and develop over the next review period.

Administrative – The past period is reviewed and scored to inform decisions such as the possibility of a bonus or salary increase.

The content and outcome of these different types of reviews can be very different, and you will find that both managers and employees will treat them differently. Scores for an administrative review will usually be inflated, and if the two types of review are mixed, then true developmental needs may be overlooked or hidden due to the risk of a reduced score and, therefore, bonus.

Under the developmental umbrella, there are a wide range of different formats and focuses that a performance review can take:

Behaviour review – Based on values or characteristics, looking at how the employee has behaved during the review period.

Objective and KPI review – A popular type of review, many employees will have objectives. Ensuring they are SMART is a key to ensuring they are worthwhile setting in the first place. They generally focus on past performance and sets targets for the future.

Staff preference review – Everyone excels in certain areas and will undoubtedly struggle in others, no matter how hard they try. This type or review focuses on playing on employee’s strengths, where possible within their role and the business.

More businesses are taking another look at their performance review processes, with many moving to a more informal but frequent process, than a once a year form.

The rest of this series will take a look at the practical things that you can do to ensure performance reviews have a positive effect on your business.