Performance reviews can often lead to no small amount of stress on behalf of employees and managers, but this is largely unnecessary. All a performance review is meant to accomplish is to inform an employee how well they are handling the job they were hired to do. A good manager takes the time in a performance review to congratulate an employee on the aspects of their job which they have succeeded at. Poor performance should be treated with a level of understanding but with a firm insistence on using better work practices.
Performance reviews in the workplace can serve a variety of different functions in the manager-employee relationship. Performance reviews give a manager the opportunity to control employee performance proactively instead of reacting to poor performance or just hoping that above-average work will occur on its own. Performance reviews can also relieve stress for employees by communicating what is expected of them. A manager conducting performance reviews can better see where jobs overlap in the workplace and can eliminate or change employee responsibilities to account for this. Other purposes of a performance review include discussing career and skill development and gaining a staff perspective for future managerial decisions.
A performance review works on the assumption that an employee is willing and able to improve any shortcomings on the job for the good of himself and the company. Beyond communicating basic expectations in employee performance, a performance review can help an employee find better ways to do their job or can correct wasteful actions preventing them from working efficiently. Often, exceptional performance reviews can result in increased bonuses and salary; rewarding employees in this way increases the likelihood that they will adapt to managerial feedback.
From the company's standpoint, the performance review holds an employee accountable for his work habits. Where employees are not held accountable, a situation known as "non-alignment of responsibility and accountability" can occur. Without close examination of each employee's role in the organization, employees may be unmotivated to work harder. Work redundancies are allowed to flourish, wasting time and money. Organizations can use the reports created by performance reviews to inform their decisions on succession planning, promotion and employee development.
Evaluation & Feedback
A performance review must include both a period of evaluation and some form of employee feedback. Evaluation should include an on-the-job examination of an employee's work habits as well as a short interview session on the topic of the employee's work. 60 days of on-the-job employee evaluation, involving only an examination of the employee's work efficacy, is one rule of thumb for the evaluation period.
A feedback session should occur in a private area where communication can be honest and open. Critical analysis of an employee's job is to be expected, but should be coupled with specific suggestions for employee improvement to keep from discouraging employees. Performance review feedback is not meant to surprise employees as it is based on the daily work they perform year in and year out.