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The Importance of Performance Reviews

By Charles Hopkins Published 04/20/2006 | Business and Finance
If you employ people in your business, you're going to be faced with a number of tricky management issues - dealing with tardiness, sick leave, and keeping your staff motivated.

Performance reviews can be useful for motivating employees, but only if they are accurate. An inaccurate review, which fails to recognize the employee's value to the organization, can be worse than no review at all.

If a performance review fails to take note of an employee's shortcomings, it won't be taken seriously.

If an employee consistently performs poorly, it's vital to document this, as well as any corrective action that is taken.

Your staff may be genuinely unaware that their performance in some areas is poor (or exceptional!), unless you tell them.

Most employers conduct performance reviews annually, in order to decide on salary increases and bonuses. Since performance reviews should build on previous reviews, it's better to conduct them more regularly - every 4 months is a good frequency.

Employees thrive on feedback, and regular performance reviews provide a consistent framework for providing positive reinforcement.

Under-performing employees can also benefit. Regular reviews can identify weak performance areas, and allow you to set clear goals and expectations, and to coach and mentor the employee to improve their performance.

Objectivity is vital. You need to concentrate on measuring performance, and not on quirks of personality.

The performance review should relate directly to the employee's job profile - your employees do have job profiles, or job descriptions, don't they? The job profile should identify the Key Performance Areas for the job. For instance, some Key Performance Areas for a receptionist might be:

answer incoming calls within 3 rings
take messages accurately and pass them on quickly
type at a rate of 25 words a minute

The more measurable a Key Performance Area, the better.

Some other measurable Key Performance Areas include:

number of sick days
number of absent days
number of instances of tardiness
number of customer complaints
number of customer compliments
number of co-worker complaints

Of course, you would have to keep accurate records of all of these, in the employee's personal file.

You should prepare a performance review form for each employee, which lists the Key Performance Areas for the job, and provides a matrix for you to record the performance in each area.

For example, you might rate the employee's performance in each Key Performance Area against a scale of
'Poor, Satisfactory, Good, Very Good, Excellent'

Performance reviews should be a collaborative process - as far as possible, the employee should agree with your assessment.