Key Facts about Performance Review

Annual performance reviews are an important component of an employee’s career development. The objective of a performance review is to have an unbiased and balanced assessment of an employee’s performance. Several resources are usually available to help supervisors and Leaders employee prepare for the performance review process.

What is a Typical Performance Review Process? 

The process of evaluating an employee’s performance over a specified period of time is known as a performance review. It is a standalone process not linked to any kind of strategy or goal setting.

Traditionally, a performance review:

  • Is normally based on a review of how an employee did his or her job in the previous year
  • Maybe a pay review
  • Maybe a review for bonuses
  • Maybe an assessment of the employee for promotion
  • Is normally conducted annually or twice a year
  • Is a documented process and the HR is the sole custodian of the performance review?

Objectives of Performance Review 

Performance Review

A performance review can be done keeping the following objectives in mind:

  • To maintain records for determining compensation packages, wage structures, salary increments, and so on.
  • To identify the strengths and weaknesses of employees so that the right people are put on the right job.
  • To maintain and assess the potential of an employee for career development and growth.
  • To serve as a basis for influencing the working habits of employees.
  • To review and retain promotional and other training.

Advantages of Performance Review 

A performance review is an investment for an organization which can be justified because of the following advantages:

Promotion: Performance review helps supervisors to decide on promotion for efficient employees. Conversely, inefficient employees may be demoted or dismissed.

Compensation: Performance review helps figure out compensation packages for employees. Merit rating is made possible through a review. Performance review tries to give worth to an individual’s performance. Compensation packages which include high salary hikes, bonuses, perks, extra benefits, allowances, and so on are dependent on this. The criterion of permeance review is not based on seniority but on merit.

Employees Development: Because performance review has a systematic approach, it helps supervisors to plan training and future development programs. It analyzes the strengths and weaknesses of employees so that new jobs can be designed for those performing well. It also helps to plan and chalk out future development programs.

Selection Validation: Performance review helps supervisors to understand the importance and validity of the selection procedure. They can make changes to the procedure based on their strengths and weaknesses.

Communication: Effective communication is crucial between employer and employee in an organization. Performance review helps this by:

  • Helping employers understand and accept the skills of subordinates.
  • Helping subordinates understand superiors and create trust and confidence in them.
  • Helping to maintain a cordial labor-management relationship.
  • Developing the right spirit of work and boosting employee morale.

Performance Review

Motivation: Performance review serves as a motivation tool. An employee’s performance is evaluated by measuring if targets have been achieved, thereby determining his or her efficiency. This motivates an employee to do a better job and improve his or her future performance.

Performance review is an important and relevant process, and the performance review of an employee needs to be done correctly and in an unbiased way so that people who have done their jobs well get their just rewards. A person’s career graph is based on how performance reviews have been done and what their outcome was. Rewards and recognition is what keeps employees motivated to keep doing the best they can while learning new things to do their job better in the future.