The annual performance review and the merit review are terms that are often thrown around during the annual or biannual process of evaluating employees. Even though annual and merit reviews are different, they are often confused with one another or have intermingled meanings. While one review type focuses on the review of the employee’s performance, the other takes a more objective perspective.

Annual Performance Review

An annual performance review refers to the evaluation of the employee’s performance in the job position. The performance review is often a short meeting where the employer discusses all of the things the employee is doing correctly in the job and addresses the problems or issues that need improvement. The review is conducted by the employer or a manager in the department where the employee works. A positive performance review can lead to a salary increase or a promotion for the employee.

Merit Review

The merit review process is the action where an outsider reconsiders the information and facts discussed in a given situation. The merit review process is to determine whether the decisions made in the original review process are correct and valid. This process is used to ensure the fair and reliable treatment of workers in a company, because an employer could give a bad review based on personal opinions about an employee.

Objectives of the Reviews

The objective of an annual performance review is to help the employee stay on the correct track with job tasks and responsibilities. If the employee is doing well, the employer provides rewards. If the employee needs help in the job, an employee development process could begin, where the employee gets assistance and guidance to improve the work or set individual goals. The objective of a merit review is to correct any decisions made by the original evaluator to ensure the employee gets a proper evaluation and review. The merit review's objectives are to ensure the information is factually correct and acceptable to all parties involved.

Annual and Merit Reviews

The annual employee review and the merit review can be part of the same review process. This could be why the two terms often get intermingled or confused. The reviewer conducts an employee review where the worker’s performance is discussed in both positive and negative aspects. Based on the information, the reviewer helps the employee improve work quality or awards a promotion or raise based on work well done. The merit reviewer determines whether the promotion or raise is the proper decision for the employee based on the employee review information.