There are many benefits associated with conducting regular performance reviews. In fact, performance reviews or performance appraisals are one of the most underused and misunderstood management tools available. Particularly in small businesses, performance reviews tend to be postponed or neglected in favor of more urgent matters. This is especially true as often, neither the manager nor the employee seems motivated to have the review! But the truth is, that performance reviews are probably more important than you might think. They also don’t need to be difficult to do (especially once you’ve got the right performance review templates in place).
7 Reasons you need to do Performance Reviews
If you’re not yet in the habit of conducting regular performance appraisals, you’re doing your employees and your company a huge disservice.
Even for small and medium companies, performance reviews help to;
1) Demonstrate You Value Your Employees
While most employees might say they dislike performance reviews, in reality, companies that implement regular employee reviews have 14.9% lower turnover rates than companies that do not provide regular feedback. Even if appraisals are done poorly, the mere fact that you’re doing them sends a signal that your employees are important.
2) Strengthen Relationships
Performance reviews also help create a greater bond between managers and employees. When there’s a regular, honest discussion taking place, any issues are surfaced and each party has a greater understanding of each other. In order to build strong relationships with employees that results in a motivated, high performing team, managers must continuously build their skills in providing feedback, and make scheduling performance reviews a top priority.
3) Clarify Roles & Expectations
You may not realize it but some of your employees probably have a very different idea about what their position is than you do. Having regular performance reviews helps get everyone aligned and on the same page. It’s a great opportunity to clarify the employee’s role and status in the organization. Most workers also want to know where they stand regarding their job performance and are interested to see how else they can help the company.
4) Help Keep Remuneration Fair
There’s no doubt that compensation and promotion decisions are difficult to get right. But having a regular interval where you stop and evaluate each employees’ package to ascertain whether it’s reasonable can help you keep in line internally, and with market rates. Without a set timing for remuneration reviews, you can easily be faced with having salary and promotion discussions all year long. And the bigger problem is that the squeaky wheels are the ones that will get attention – meaning that you can easily overlook more deserving, but less demanding employees. This might sound like an opportunity for savings, but sooner or later those employees will realize they’re being underpaid – this is usually upsetting and often leads to them leaving – the last thing you want for your best employees.
5) Recognize Top Performers
It’s easy to take great team members for granted, but having regular performance reviews ensures that you’ll actually realize which employees are going above and beyond. This gives you an opportunity to give them the appropriate recognition – whether that be verbal appreciation or increased remuneration. (Do this before they realize their own value and decide to go elsewhere!) Recognition is the number one thing employees say their manager could give them to inspire them to produce great work and 69% of employees say they would work harder if they felt their efforts were better recognized.
6) Face Performance Issues
Likewise, having regular performance reviews forces you to confront any issues with performance and decide on a plan of action. Most of us dislike confrontation and awkward conversations, but in many cases, these are the most important discussions to have. Dealing with poor performance is one of the most important things you can do for your company.
7) Set Motivating Goals
Performance appraisals are the ideal time to take a step back and discuss the big picture – both for the organization, and for this employee. Without a structured event like these, it can be easy to get caught up in day-to-day business without anyone thinking ahead and with a more strategic lens. Inspiring goals are a great way to get employees motivated and excited for the impact they can have on your organization, and their career.
Of course, there is also a lot of criticism about performance reviews, with some companies opting for newer ways of providing employee feedback. However, for the vast majority of businesses, unless you have an extremely innovative HR team designing new systems for you, performance reviews are an essential management tool for all of these reasons and more.
Free Performance Review Templates
To make it easier for small and medium businesses to conduct regular performance appraisals, we’ve prepared here 4 of the most commonly used types of performance reviews. And yes, we’re providing editable versions of these, totally free of charge.
For each of these Performance Review Templates, you can download them in a PDF version or as a Word Document or Pages Document (for Mac users). If you want to edit them, the Word or Pages formats will be a better option.
We hope these save you some time and help you improve the quality and regularity of your performance reviews! If you know anyone that would benefit from these templates, please don’t hesitate to send them here.