Performance reviews are one of the most underused and misunderstood management tools available. Particularly in small businesses, performance reviews tend to be postponed or neglected in favour of more urgent matters. This is especially true as often, neither the manager nor the employee seems motivated to have the review! But the truth is, performance reviews are far more important than you might think. They also don’t need to be difficult to do (especially once you’ve got the right performance review templates in place).
If you’re not yet in the habit of conducting regular performance appraisals, you’re doing your employees and your company a huge disservice. Here’s why performance reviews should not be missed - even for small and medium companies;
1) Demonstrate You Value Employees
While most employees might say they dislike performance reviews, in reality, companies that implement regular employee reviews have lower turnover rates than companies that do not provide regular feedback. Even if done poorly, the mere fact that you’re doing them sends a signal that your employees are important.
2) Strengthen Relationships
Performance reviews create a greater bond between managers and employees. When there’s a regular, honest discussion taking place, any issues are surfaced and each party has a greater understanding of each other. In order to build strong relationships with employees, managers must continuously build their skills in providing feedback, and make scheduling performance reviews a top priority.
3) Clarify Roles & Expectations
It’s likely that some of your employees have very different ideas about their position than what was intended. Having regular performance reviews get everyone aligned and on the same page. It’s a great opportunity to clarify the roles and most workers want to know where they stand regarding their job performance and are interested to see how they can help the company.
4) Help Keep Remuneration Fair
Compensation and promotion decisions are difficult to get right but having a regular interval where you stop and evaluate each employees’ package can help you keep in line internally, and with market rates. (Otherwise, you can easily be faced with having salary and promotion discussions all year long!) This can also mean that the squeaky wheels are the ones that will get attention – meaning that you can easily overlook more deserving, but less demanding employees.
5) Recognise Top Performers
It’s easy to take great team members for granted, but having regular performance reviews ensures that you’ll actually realise which employees are going above and beyond. This gives you an opportunity to give them the appropriate recognition – whether that be verbal appreciation or increased remuneration. (Do this before they realise their own value and decide to go elsewhere!)
6) Face Performance Issues
Likewise, having regular performance reviews forces you to confront any issues with performance and decide on a plan of action. Most of us dislike confrontation and awkward conversations, but in many cases, these are the most important discussions to have. Dealing with poor performance is one of the most important things you can do for your company.
7) Set Motivating Goals
Performance appraisals are the ideal time to take a step back and discuss the big picture – both for the organisation, and for each employee. Otherwise it can be easy to get caught up in day-to-day business without anyone thinking ahead and with a more strategic lens. Inspiring goals are a great way to get employees motivated and excited for the impact they can have on your organization, and their career.
For the vast majority of businesses, performance reviews are an essential management tool for all of these reasons and more.
Free Performance Review Templates
To make it easier for small and medium businesses to conduct regular performance appraisals, we’ve prepared 4 commonly used types of performance reviews. Downloadable and editable versions of these are available totally free of charge. Just go to: hrpartner.io/templates