Performance Reviews – An Effective Tool or a Waste of Time?

posted by Employment Innovations on April 26th, 2012  Posted in News

There are a lot of thoughts and opinions regarding Performance Reviews but a general consensus tends to be that they are a necessary evil that can be very valuable – if carried out well.

The performance review process can either be formal and structured or an informal annual chat. It can be strictly rated, measured, tied to a remuneration scale or ad hoc and based on business achievements throughout the year. However they are performed, there are certain factors that will contribute to their effectiveness.

Is the employee aware of how his performance will be evaluated?
For instance, does he know that although he is strong in sales he is also expected to be able to fill in a purchase order correctly and will be marked down for not being able to do so? Having realistic expectations and an understanding of what will be measured and evaluated will help an employee be receptive during a review.

Is the performance review rating easily understood and consistent?
There should be a clear explanation of what a rating represents and how it is measured. This is especially important if the rating outcome is directly linked to a remuneration review. For example, in a process where a scale of 1 to 5 is used, the scale is explained below:

1 = ‘Below Acceptable Performance Standard – Immediate Improvement Required’
2 = ‘Does Not Meet Performance Expectation’
3 = ‘Meets Performance Expectation’
4 = ‘Exceeds Performance Expectation’
5 = ‘Excels’

In this case, remuneration raises above a CPI increase for average scores of 3 or below, may send the wrong message to the employee, after all, if they are not exceeding the performance expectations in their position, should they be rewarded?

Also, if several facilitators are conducting the performance reviews, it is very important that ratings are consistent in order for employees to feel that they are being reviewed fairly. If a strict facilitator consistently marks lower on the scale compared to other facilitators and their employees therefore lose out on recognition or reward, it could result in demotivation and lack of support in the review process.

Is the facilitator honest and specific or does he chicken out?
The performance review process is the ideal time, and sometimes the only opportunity, to clearly communicate to an employee where improvement is required and what is expected to be achieved within what timeframe. Needless to say, if an employee who is performing poorly is not advised of that or set goals or performance standards to achieve, they are less likely to change or improve.

Do the employees understand that performance reviews are not fault finding missions?
Employees who understand that performance reviews are carried out to align expectations between employer and employee and assist the employee in being better at their job and more valuable to the business are more likely to participate actively in the process and be receptive to constructive feedback.

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