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.

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