Are Performance Reviews Effective?

Updated: June 01, 2010

Performance Appraisal is defined as, "Process of determining and communicating to an employee how he or she is performing on the job and, ideally, establishing a plan of improvement". One of the most common uses of performance appraisals is for making administrative decisions relating to promotions, firings, layoffs and merit pay increases. Performance reviews should be a positive experience and contribute to the overall welfare of the organization. Performance reviews help individuals to do better, raise self-esteem and motivation. Performance reviews is not a process to be avoided; rather it should be implemented in all organizations and promoted as a key management activity. The benefits to be realized from a proper evaluation system far outweigh the time and effort required to develop, implement and maintain the process.

A concern in organizations is how often to conduct performance reviews. There seems to be no real consensus on how frequently performance reviews should be done, but in general the answer is as often as necessary to let employees know what kind of job they are doing and, if performance is not satisfactory, the measures that must be taken for improvement. For many employees, this cannot be accomplished through one annual performance appraisal. Therefore, it is recommended that for most employees, informal performance reviews be conducted two or three times a year in addition to an annual formal performance review. Individuals have a strong need to know how they are doing and where they stand in the eyes if their supervisor.

Remember, that regular discussions of performance should occur on an on-going basis and be seen as an opportunity for useful communication between the individual who assigns work and those performing it. Performance reviews are used as a means to communicate to employees how they are doing and suggesting needed changes in behavior, attitude, skills, or knowledge. A completed performance review should include a plan outlining specific training and development needs.

Featured Research
  • How UC Can Help Your Business Survive the Holidays

    The holiday season is filled with frenzy and excitement for businesses and consumers alike. Consumers prepare gift lists, compare brands and prices, and begin shopping with a vigor that is not present most other times of the year. For many businesses, the holiday season accounts for a large profit bump at the end of each year, and companies strive to exceed their goals and keep customers happy during this rush late in the year. more

  • [Infographic] Switching Phone Systems

    There are a lot of possible reasons you might want to switch to a new phone system. The old one might cost too much or be too troublesome to operate and maintain. It might not be flexible enough. It might not be reliable enough. Or it just might not have the kinds of features and capabilities that you need in today’s competitive business climate. more

  • Business Intelligence Software Cost Guide

    Your choice in a BI (Business Intelligence) provider can lead you to make better, data-driven decisions for your business, resulting in significant ROI. Or it can cost hundreds of thousands of dollars with mixed results. more

  • The New 2016 ERP Comparison Guide

    Selecting an ERP solution is no easy undertaking. You have to select and configure a system that fits your exact business needs. The right system can make operations more streamlined, efficient, and agile. But choosing the right vendor can be difficult. more

  • 2017 CRM Buyer's Guide

    Customer Relationship (CRM) software has become one of the most important business tools in today’s world. By allowing you to better connect with new and existing customers, CRM is an indispensable tool for sales teams and customer service teams alike. But with so many choices available, it can be difficult to decide on a solution. more