The Purpose of Performance Reviews

Many companies believe the higher the salary they offer employees, the better the performance. Moreover, managers and HR professionals assume that employees understand the link between pay and their performance, as it is common responsibility in these respective roles to manage on a daily basis.

However in reality, most employees have not received training in performance management processes and have never been required to know about people management. They therefore have no idea how their performance impacts their pay packet, or the reflective workload and standards that the position demands.

It is a fact that most staff believe performance reviews to be a waste of time. They see the review process as having little impact on their earnings and is simply a once-a-year meeting that has little or no purpose. Employees can spend hours on self assessments only to walk away from the review meeting with the feeling that their pay rise was pre-determined before they sat down with their manager.

If employees don’t understand or can’t see the reasoning behind performance reviews, which is meant to motivate staff to raise performance, then pay rises and rewards are a waste of resources.

How to implement Performance Reviews

It is important that managers establish clear and regular communication with employees and not just at the review once a year. Through this communication, performance reviews can be explained and the process of what will happen and how they will be structured will become more transparent. Consequently, employees at every level will understand how their individual performance can impact their ability to earn money.

Further to communication, managers can provide reference materials. For example, a calculation sheet that employees can refer back to or interact with to see the impact a change in ratings has on bonus on salary.

Training on performance reviews should be given not just to managers, but all staff involved with the performance management process. Encourage individuals to take an active role in preparing for performance review discussions; detail why performance reviews exist and how they are a benefit to both the employee and the organisation.

Remember, the promise of a raise, bonus or other incentive to staff has a far greater impact when the employee truly understands how pay decisions are made, which in turn improves employee motivation.

Recognise the importance of performance management for your business, but unsure how to proceed? Call our HR team today on 01223 855441 or send us a message.