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6 Reasons why performance reviews may not be adding value in your business

Performance management and annual reviews are often met with a fair amount of resistance. They are often not viewed as a process that adds value to the business.

However, with the right attitude and approach to this process, performance reviews can be a tool that adds value and potentially increases productivity, workplace harmony and helps you achieve a return on your investment.

There are a number of reasons why your current review process may not be serving your business and achieving the outcomes you want.

1: Lack of Management support

It is imperative that the Management team support and drive the performance management process. Without this support, performance management will not be successful no matter how well-designed and engaging the process is. Committed and actively engaged Managers will demonstrate the value in the process and provide support and recognition to managers and employees who exhibit the expected behaviors and actions.

2: Lack of strategic focus

Your business’ overall strategy and goals should be integrated into your performance management process to deliver real business value. Including your company goals and priorities in the process will focus your performance management on areas that are key to your business growth. This will contextualise and assist your employees to understand how their everyday work and individual goals help your business to achieve these objectives.

3: Lack of timely and meaningful feedback

You don’t have to wait until the formal performance review to provide feedback to employees. In fact if you do, you may find employees feel blindsided, and this can lead to disappointment, confusion, frustration, and disengagement. Disengaged employees are then less productive and less motivated to improve their performance. Encourage your managers to provide timely, meaningful feedback as required. Acknowledge positive behaviours as they occur and address performance issues immediately.

4: Lack of proper training and communication

Without the appropriate training and development, your Managers may not understand what performance management is and why it is a valuable tool in the workplace for managing staff. In the implementation phase, it is crucial to communicate with your team about the process, desired outcomes and the benefits of performance management. It is also important to provide training to help managers obtain the appropriate skills to properly engage their teams in performance management activities.

5: Lack of appropriate recognition and rewards

Rewards can be extremely important in recognising and celebrating top performance. It can also help to keep your employees engaged, motivated, and inspired about their future with the company. An effective rewards and recognition program should have clear expectations and criteria around what types of behaviours and actions are rewarded that drive your company forward. Performance reviews should be a key component in helping identify those employees who are striving for excellence.

6: Lack of simplicity

Your performance management process should be simple, easy to understand and use. Bad performance management processes are costly and deliver little value to the business and your employees. However, when it is done correctly, the impact of effective performance management is significant. Not only could you experience an increase in your revenue, you will also stop your top performers from walking out the door as they are feeling valued, engaged and part of the team.

Addressing these issues, and implementing change can mean that your performance review process becomes a valuable tool in the workplace for communicating, encouraging the behaviours you want and changing those you don’t want.

The benefits of performance reviews:

We believe there is value in having a conversation and touching base with staff, especially in busy work environments where “one-on-one” communication can be difficult.

There are so many benefits to annual reviews including:

  • Allowing a manager to provide positive feedback as well as identifying areas for improvement.
  • Providing an employee with opportunities to discuss and even create a development plan with the manager to include such items as on-the-job training so they can improve their skills.
  • Employees feel motivated if they feel supported.
  • It provides a structured process for an employee to have  discussions, identify problems, clarify expectations and plan for the future. It allows both manager and employee set up long- and short-term goals.
  • The performance appraisal system also assists management in deciding about the promotions and/or redeployment for the employee.
  • Both manager and employee keep performance appraisal records and can retrospectively review the changes in their performance in future.

When performance reviews are conducted correctly, they add significant value to a business and their most valuable asset: the employees.

By Karen Arnold

Director and Business Development Manager

Effective Workplace Solutions