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Annual Reviews-why bother?

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With the end of financial year fast approaching, one common question on managers’ minds is often “what is the purpose of doing performance reviews when I have so many more important things to do?”

One of the main criticisms from employees in many organizations is that they don’t receive any feedback about how they are doing and if they do get feedback, it’s almost always negative. While sometimes performance evaluations are not the most pleasant thing to give or receive, they are absolutely necessary to ensure you are meeting and exceeding business goals.

Well-executed performance reviews provide the following benefits for your business:

Direction – They provide a structure to set individual goals that are aligned with team and business goals. This ensures your employees are reading from the same page (or at least the same book) with regard to where they business is heading.

Retention – They present an opportunity for an open conversation with your people about their performance. By taking the time out of your schedule to have this discussion and offer positive and constructive feedback, it shows them you value their contribution. For an employee who may be frustrated and contemplating other options, such open and honest dialogue may ease some of the frustration and shift focus back to your business.

Promotion – They can help identify employees who have the potential for a promotion or the ability (or desire) to fill other positions within the business.

Compensation – When linked with salary reviews, they offer a consistent system to measure achievement against pre-determined criteria, thereby removing any subjectivity from salary increase decisions.

Training needs – They can help to identify gaps in skills or experience that are limiting or inhibiting progress against objectives. Knowing about these gaps and addressing them now will be much easier than fixing the problems they may cause for your business down the track.

Career goals – They provide an opportunity for your employees to discuss their career aspirations. This may help with retention if you can offer a career path or a development opportunity that assists with the employee’s career goals.

Changes in behaviour / attitude – They provide a structure for discussing issues around required changes to attitude or behaviour in the context of the business or team objectives –  before it becomes a disciplinary concern.

Disciplinary action – In the case of repeated under-performance that has been discussed and documented as part of the Performance Review process, the trail of documentation can provide a legally defensible reason for termination.

Here are some tips to make sure your Performance Reviews are well-executed.

1. As the manager, have a positive attitude about the value of the Review process

2. Don’t let there be any surprises during the Review – regular and timely feedback should be provided throughout the year.

3. Give employees notice of the Review date and sufficient time to prepare their own notes (send them the forms in advance).

4. Be specific with your feedback – don’t provide generalities such as ‘work harder’ or ‘be a better team player’. These do not offer enough information to ensure the employee understands the nature of the concerns. Specific examples are a must.

5. Use the review as an opportunity to coach and assist the employee to improve rather than to simply rate their performance.

6. Set goals / objectives that are Specific, Measurable, Attainable, Relevant and Time-Bound (S.M.A.R.T)

7. Be open to feedback from your employees about you as the Manager.

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