If you employ people in your business, even just one, then you’re probably familiar with the performance review. Even if this is your first time running a business, you were likely on the receiving end of one at some point!

For most businesses, they’re treated as an annual (or maybe quarterly) meeting between employees and their managers to discuss job performance and suggest improvements. But here’s the thing. A lot can happen in a year. So having 12 months’ worth of comments and improvements saved up for that one review isn’t actually that useful to anyone. This begs the question, what is the point of performance reviews, and what could you do to improve them in your business?

The Real Role Of Performance Reviews

In general terms, performance reviews are a chance for both employer and employee to reflect on the working relationship, the performance of the employee over the last 12 months and maybe even discuss any relevant salary changes, accommodations or other upcoming issues.

First things first, the second half of that sentence should always be a separate meeting and should happen at any point during the year when either party thinks it’s needed. We see a lot of managers use performance reviews as a way to ‘touch base’ with employees so that they don’t have to do as much during the year, and this isn’t a great approach for anyone.

Instead, performance reviews should be reserved to discuss the employee’s performance at work, their workload, how they are coping and any support they need from their manager. It gives employees the chance to understand what’s expected of them and learn what behaviours they need to alter or modify to do their job better. It also gives the manager a chance to get to know the employee better, identify strengths and weaknesses, assess growth and send a message that they care about the employee’s performance and development. They are also a great opportunity for managers to gather feedback on their own performance and how they are supporting their employees.

Performance reviews should be a positive experience – a chance to learn and improve on the previous years’ work – and not a disciplinary hearing where managers run through a list of failures. Sadly though, this is often the case, and performance reviews either end up being overly negative, or worse, an utterly useless box-ticking exercise.

Continuous Feedback Or Annual Appraisals?

The ‘standard’ format for performance reviews and appraisals is currently annual, usually around either the work year anniversary of the employee or the start of a new calendar or fiscal year. But discussions around the effectiveness of a single annual appraisal have been going on for years, with a lot of good arguments for and against retaining the format. Including the idea that annual appraisals should be ditched altogether and replaced with a new system of continuous feedback.

This would mean no more once-a-year reviews and more on-the-spot feedback, regular reviews, and consistent performance check-ins. This approach has 3 big benefits. First is that it helps keep employees’ efforts in line with the business goals. This leads on to benefit 2, which is that companies can be much more adaptable and rapidly effect change throughout the business. And thirdly, it’s much more popular with employees!

In fact, the research has been pretty conclusive on that last one. According to a study done by PwC, 51% of employees said they welcomed and expected regular feedback and praise for a job well done. 51% also said that feedback should be given frequently or continually on the job, with only 1% saying that feedback was not important to them.

Overall, a regular feedback cycle between managers and employees can result in timely corrections to behaviours, improved and ongoing development and a much better employee-manager relationship. In fact, the only thing holding many businesses back from moving over to this feedback method is a lack of buy-in from senior leadership and not knowing how to record such informal feedback. Which, if you think about it, is an easy hurdle to overcome.

You can read the full report on continuous feedback by clicking here – I definitely recommend it!

Top Tips to Improve Your Performance Reviews

When you sit down to do a performance review, there are a few things you can do to get the most out of it as a manager and help your employees too.

Don’t just focus on the bad: Yes, there might be areas you need your employees to improve in, and you should absolutely discuss those. But a performance review needs to be balanced in order to be effective. Just focusing on the negatives and areas for improvement can be demotivating and give you the opposite result than you want. So, make sure you’re recognising and praising good work as well, highlighting what went well and what was learnt so that both employee and business can improve in the future.

Be honest: Even if the discussion you need to have is uncomfortable or difficult, it’s important that you’re honest about it from the off. You’re not doing anyone any favours by skirting around it! Be upfront about the issues and your expectations and allow space for a productive discussion.

Listen, and make sure you’ve been heard: Hearing and listening might be similar, but they aren’t the same thing. When giving feedback, make sure the person you’re speaking to has clearly understood what you’ve said. Equally, repeat their points back as you understand them, so that they know you’ve understood them to avoid any misunderstandings later on!

Don’t expect instant results: Even when feedback is well received, you shouldn’t expect changes to happen right away. Any change takes time, especially when it comes to the habits people form, so don’t expect your suggestions to manifest right away. Give employees time to absorb your feedback and act on it, and make a point of recognising the incremental changes, not just the big strides they make.

Ultimately, feedback is an essential tool for all managers and business owners, but its effectiveness is all in the delivery. It’s up to managers to understand the role of performance reviews, and how they can best deliver feedback to their team. For some, that might be a monthly or even weekly check-in, while with others it might simply be giving feedback on the spot.

At Karen HRM Ltd we understand how difficult performance reviews can be But we also know how important they can be to developing talent within your business, and fostering a positive and encouraging company culture. So if you’re dreading doing performance reviews in 2023, why not give us a call and see how we can help?