Performance Reviews – Worth It?

Many employers view performance reviews as a pain. They seem unproductive or don’t achieve the goals for which they were designed. It can also be a stressful and unpleasant experience for both managers and employees. Managers struggle to find time to create meaningful content for each employee, while employees may not absorb managers’ feedback because they are anxious about how the review impacts their compensation. This begs the question, are performance reviews still worthwhile?

While some companies have done away with formal reviews all together, preserving performance reviews is important. They allow employees to know where they stand today, where their career with the company is heading and provide opportunities to improve. Good performance evaluations align employees with broader company goals. Some firms have had success resolving compensation anxiety by separating conversations about compensation from those regarding performance.  

Separating Compensation

Some companies have benefited from by having an annual performance review that is not attached to compensation. This keeps conversations more productive and objective. A separate conversation regarding performance allows the manager and employee to focus on behavior and objectives. Similarly, a separate conversation regarding compensation allows the parties to focus on salary incentives.

When companies do address compensation, they should be as transparent as possible. If criteria for raises seems confusing, then employees will assume getting a raise is about garnering favor with the boss rather than performing well. Explain how bonuses and raises are calculated and administered, and if there are limitations on compensations due to budget constraints. This way, employees understand that the company still values them, even if they are disappointed with their raise or bonus. Let fairness and transparency be your key values, and your employees will reciprocate.

Continuous Meaningful Feedback

Companies have found that on-going feedback regarding performance can have greater effect on employee behavior and morale. Through on-going conversations with employees, managers can address situations closer to when events occur, thus giving feedback when it is most beneficial for the employee. Frequent constructive feedback can minimize anxiety around discussing performance. Research suggest that quarterly reviews or “conversations” have the greatest impact, because it creates a culture where continuous feedback is encouraged and normalized.

Set Clear/Measurable Expectations

When conducting performance conversations, it is important that managers speak to performance in specific terms and set clear and measurable objectives for employees. Focus on goals; goals for the individual, team and company. Managers should connect how an employee achieving their personal goals tie into achieving overall company goals and maximizing the bottom line which can translate into monetary benefits for the team and employee. 

If objectives are clearly stated, then there is less bias when conducting reviews. It creates an atmosphere where the discussion in centered around the employee’s actions rather than them as a person. Clear goals can connect the company’s bottom line to the employee’s career ladder.

Integrating Technology

Ensuring you have the best resources to facilitate your process is foundational. Using Innovative Business Solutions’ Performance Review module can help you achieve your performance review goals and make it a worthwhile experience. We can accommodate your current process or partner to design new roadmaps.

If you and your team have questions regarding performance review options or are interested in changing your strategy, please email us at

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