Time for Performance Reviews

October 21, 2022

It ’s getting close to the end of the year and what normally happens in a business? It is probably the time of annual performance reviews. Everyone who has ever worked for any period of time has probably had a performance review at one time or another. They either loved it, hated it, or dreaded it, and very likely received a salary increase tied to the review. In the usual scenario, a manager reviews the employee’s performance, and there is a good possibility that negative performance is discussed rather than positive reinforcement relating to what can be done in the future to improve performance and productivity. 

What Happened to the Review?

In many small businesses and SMEs, performance reviews are never given. Management either doesn't have the time or doesn't understand the importance of performance reviews, so they are simply ignored. Even in the smallest business, performance reviews are important and essential for the following reasons: 

·       It gives owners and managers an opportunity to discuss performance with employees.

·       It gives employees a formal opportunity to discuss aspects of their jobs that they view as positive or negative.

·       It gives employees an opportunity to discuss advancement opportunities.

·       It strengthens the communication between owners/managers and employees if handled correctly.

Yesterday’s Review

Many think performance reviews are outdated and a thing of the past. When conducted once a year, discuss more negative aspects rather than positive aspects of performance, and tie a salary increase to the review, they probably are a thing of the past. Reviewing an employee once a year, building a fear factor, seeing anxiety levels rise, and giving a salary increase that might be disappointing is certainly a reason that performance reviews might not be an effective management tool for today's workforce.

The Modern Review

Regular performance reviews that track daily, weekly, monthly, or quarterly performance gives managers an opportunity to work with employees to continue good performance, motivate for higher performance, or improve mediocre performance. If you think about the concept of performance reviews, what positive result can occur by reviewing an employee once or, maybe, twice a year? Most of the time, the manager only remembers recent performance, and the employee does everything possible to impress his or her manager in the weeks leading up to the review. No wonder it is a less than perfect process.

Improve Performance

Performance reviews should not be just about managers doing all the talking and evaluating while employees do all the listening. The optimal employee review is when employees equally participate in the process. They self-evaluate their own performance prior to the actual review based on pre-established goals and criteria. The self-evaluation when compared to the identical performance document prepared by a manager allows each to see if both are in sync regarding expectations. What was accomplished? Were expectations met? What are the goals for the next performance period? How were you helped or hindered by the company or co-workers in accomplishing your goals? Numerous areas can be discussed related to an individual's job performance, expectations, work ethic, etc.

A Modern Approach

A modern approach to performance reviews makes the process:

·       More frequent

·       Tied as much as possible to performance milestones

·       Encourages two-way communication

·       Stresses positive versus negative performance

·       Highlights areas for improvement

·       Urges engagement

·       Establishes future goals

Current job performance should be tracked in some way. It can be done manually or with software programs specific for tracking employee performance on a continuous basis. Regardless of how performance is tracked, tracking allows both managers and employees to view ongoing performance. No waiting and no surprises with once or twice a year performance reviews. Employees don't want surprises when it comes to how their performance is viewed by their managers. Anxiety about job performance and job stability does not produce a motivated and highly productive employee.


Performance reviews are an ideal time to motivate employees although motivation should be ongoing in any business and not tied specifically to certain times of the year. Reviews are not a time for managers to unload pent-up frustrations with an employee. Good management requires constant back and forth communication with employees. Performance reviews are just a more formal approach to the communication process dealing with performance that should be constant throughout the year.

Salary Increases

When performance reviews and salary increases are given at the same time, unnecessary problems and anxiety can be created. The only thing the employee thinks about during the review is what the increase is going to be. For every positive comment made by the manager, the employee thinks "big increase." And, for every negative comment made by the manager, the employee becomes defensive thinking any potential increase has just been lowered. Solving this issue can simply be a matter of separating the two. The performance review is given at one time, and salary increases and bonuses given at another time based on the company's criteria and profitability. When employees understand how jobs, salaries, and bonuses equate to company profit and success, buy-in and engagement becomes much easier.  

Constant Communication

Constant communication about job performance is necessary regardless of an employee's position in a company...top manager or lowest wage earner. Everyone wants to know how their performance is perceived in their specific jobs. Performance reviews when handled correctly with a positive, encouraging tone energizes employees. They understand the areas where they excelled, met expectations, or could improve. Equally, they should understand job stability, growth opportunities, and overall how the business is performing. Understanding, however, can only be the result of honest, open, and continuous communication. Part of the communication process can be fostered through an ongoing regular performance review process.

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