Performance reviews

Many managers, bosses, and business-owners will know this one. It starts with the simple words: “It's time for your performance review.” Your employee stops in her tracks. You can't work out if the reaction is nervousness, trepidation, apathy, or something more hostile.

Perhaps you were giving her a heads-up and asked her to prepare with some form of self-evaluation. Fill in some scores. Write some notes. Meanwhile, you waded through a long analysis of her performance for the past year, poring over a ratings system while trying to remember details of wins, positive action you want to encourage, or examples of behaviour you'd like to improve.

One main upshot was finding justification for approving or denying her a pay increase, but by the time the review meeting came around, you were both so bogged down by the process the only thing you really cared about was getting it over with.

Or perhaps you took a more unbuttoned approach. No worries about preparation. Just get together and muddle through an ad-hoc review that leaves neither person any wiser, or worse, exasperated and even a bit resentful.

Either way, you had to wonder why you bothered. Boo to the performance review.

Everyone wants to succeed and improve. Just as you want your business to flourish, your employees want to grow too. But in the busy, daily work environment, it can be hard to get an accurate gauge of how your people are performing against personal and business goals without having some sort of formal appraisal process (even a rudimentary one).

Good performance reviews give you a vital opportunity for you and your employees to reflect on performance and to get together to discuss it. Feedback is essential to improvement. It helps people understand their strengths and areas that may need development.

In the SEEK survey, 91% of those that participated in performance reviews saw real value in getting feedback (on the flip-side, those not reviewed said performance feedback would help them to better understand their own performance and how they could improve).

It's about recognising when a job or task was done well or when (and how) it could've been done better. It shouldn't be about money. In fact, separating decisions on pay from performance reviews lessens the emotional load so the conversation can stay focussed on a person's achievements and where they should put their attention going forward.

It may be that employee needs (and wants) to gain new skills or get further training. Performance evaluations are a great way to spot people's talents and to work on a plan that will nurture them.

If there are any issues that are impeding productivity, an honest review process can help highlight them and you can then work on mitigation strategies before there are larger problems that cause disruptions or impel an employee to quit, or need discipline or dismissal.

It's all part of creating a team culture that supports and rewards achievement, and aims to build on it collaboratively. Motivated and valued people want to excel, which can only benefit the business as a whole. Without performance reviews, people may just meander along doing what they've always done, in the ways they've always done them. Same performance, same results.

Unfortunately, many businesses go through the motions of performance reviews without understanding the need to get them right. Just because you put your employees' performance through an evaluation process doesn't mean you're guaranteed good results.

In fact, having a performance review system that is badly designed and delivered could be damaging rather than improving your employees' and your business' progress.

Back in 2015, Deloitte found that 82 percent of the companies it surveyed for its Global Human Capital Trends report thought their employee review processes weren't worth the time they spent on them. In the following year's report, more than two-thirds of surveyed companies were redesigning their performance management practices.

This is good news. The team at MyHR sees a lot of errors and poor practices in evaluating and shaping employee performance, and the mistakes often limit the value of doing it at all.

We've already mentioned the error of using performance reviews to approve or deny a pay raise. This traditional approach can reduce the review into a salary negotiation, potentially pitting your employees against each other and management. Rather than working as a team and focussing on the goals of the company, people will be more interested in their own ambitions. The potential for disgruntlement is also high if things don't go their way.

Only holding reviews annually presents a whole raft of issues, not the least of which can be the burden of making the process overly formal and complex. Employees and managers then end up bogged down by paperwork, turning the review into a box-ticking exercise that is heavily slanted towards past performance (if you can accurately trace it) instead of ongoing achievement.

Speaking of paperwork, if you are still doing performance reviews manually, on paper - even partially - you are spending unnecessary time on form-filling, collating, analysing, and filing. Good software can automate a lot of this for you.

The more laborious the appraisal process, the more your workplace may be inclined to use the same measures and methods for all employees and all roles, in an effort to claw back a bit of time. Your business should be a team working to achieve the same objectives, with each employee playing a role within it. A rigid, blanket review system won't provide an accurate assessment of each person's performance, their talents or areas for improvement, and you will also miss an opportunity to link individual performance with overall company strategy.

Then there's the problem of the employer or manager being judge and jury, rating employees without input from others – especially that of the employees themselves. Top-down, one-sided evaluations can be clouded by bias and may provide only limited insight into the reasons for good or bad performance, be they personal, collective, or company-wide. You also risk damaging people's morale and making it harder to get their buy-in to any future goals.