Performance review management
A performance review, also known as performance appraisal or performance evaluation, is a two-way formal communication, typically a face-to-face meeting, between a manager and an employee where the manager assesses and evaluates the employee's work performance, achievements, development, and future goals.
Conducting regular performance reviews is essential to a business’s success and continued employee development and growth. It is used by businesses for many reasons, including:
- to improve productivity;
- to make decisions regarding promotions, salary increases and bonuses;
- to assess job changes and transfers within the employer’s enterprise;
- for termination and disciplinary matters;
- to identify issues relating to goals and responsibilities of a particular job; and
- to assess the employee's performance based on the goals of the business.
A performance review is also used to facilitate the improvement of an employee's performance by identifying the areas for improvement, developing a plan to improve these areas, supporting them in achieving their goals, and ensuring the commitment of the employee towards achieving their fullest potential.
Performance reviews should be carried out at regular intervals: annually, quarterly, or monthly. There are different techniques and strategies used when carrying out performance reviews. These can be classified into two categories: Traditional Methods and Modern Methods.
Traditional Performance Review Methods
The traditional methods are relatively older methods of performance reviews. It is based on assessing the personal qualities of employees which includes their knowledge, leadership, loyalty, and judgment.
Traditional methods include the ranking method, graphic rating scales, critical incident method, and narrative essays. In the ranking method, as its name implies, employees are ranked from best to worst based on a particular trait. On the other hand, a graphic rating scale evaluates employees individually based on a scale that lists different traits and a range of performance. The employee is then rated by identifying their highest level of performance for each trait. The Critical Incident Method involves keeping a record of desirable or undesirable examples of an employee's work-related behaviours. Lastly, in a narrative essay method, the manager simply writes an explanation about the strengths and weaknesses, areas for improvement, and suggestions to further improve the employee's performance.
Modern Performance Review Methods
Modern methods were created in order to improve the shortcomings of traditional methods of performance review such as its subjectiveness. They provide more concrete criteria to follow upon which employees can be assessed.
One of the most common modern methods is the Management by Objectives. In this method, employees are evaluated based on how well they accomplished a specific set of objectives.
The Behaviourally Anchored Ratings Scale or BARS, is a combination of the elements of the critical incident and graphic rating scale methods. People rating behaviours will act as observers and focus only on specific desirable and undesirable incidents of behaviour.
Assessment centres are a method that uses different assessment techniques such as job simulations, simulation interviews, group discussions, decision-making activities, and oral or written communication exercises. This method is useful when it comes to selection and promotion decisions as this will allow managers to measure multiple attributes, however, it requires a great deal of time and is much more expensive than the other methods.
One of the most popular modern techniques is known as “360-degree feedback”. It relies on the feedback and input of an employee's superiors, colleagues, subordinates, clients and customers. This provides an overview of the effect of an employee's behaviour and interactions with others in the workplace.
There are a lot of different techniques and methods that one may use in order to evaluate one's employees. Each technique has its pros and cons, and it is difficult to say which technique is better than the other. It is always important to take into consideration the culture, type, and size of the organisation in choosing the right performance review method.