How does the annual performance review assist in employee development? (Article)

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The impact of the performance review on employee development is discussed in this free article by Derek Stockley. The annual performance review is also defined.

Performance review definition and explanation

An annual performance review involves a formal discussion about an employee’s development and performance. The review is a planning process. It involves setting a plan of action for the next period and reviewing what has been achieved in the last period.

The factors discussed can include work conduct, key performance indicators, work plans, roles and responsibilities, position descriptions, training/learning, and financial and non-financial compensation.

Many organisations conduct performance reviews. Most do it at least annually, although quarterly and six monthly reviews are also common. Many will have a mini-review in between the formal annual review.

Often it is a two-way process, between a reviewer and reviewee. Most reviews would be reviewed by at least one level of higher management. Some systems use multiple 'raters', particularly 360 degree systems where managers, subordinates, colleagues and co-workers provide input to the review process.

Most organisations use paper based systems, although some use computer based systems.

Performance review as part of employee development

Other articles (see below) have focussed on the importance of performance review and the financial/non-financial factors.

In this article, I want to focus on the employee development side.

My first performance review was an interesting experience for my manager as well as for myself. At the time, my employer did not have a formal performance review system. I was young and enthusiastic, and already committed to the principles of personal development, so I asked for a performance discussion. Luckily, my manager agreed to my request.

We both had a few days to prepare. Because there was no formal review system, we both prepared a 'shopping list' of things to discuss. The discussion went well and my manager introduced the process to my colleagues on the department management team.

I do not believe that performance review systems have to be complicated. In fact, to avoid the problems often associated with performance review, I have long maintained that simplicity is an important feature, see: "Straight Talk About Job Appraisals (AIM Management Today magazine).

I believe a good performance review system helps both individuals and organisations.

I also believe that the formal reviews should mainly document the decisions and actions that occur on a regular basis. There should be 'no surprises'. A formal discussion should review what both parties have been discussing informally.

The informal feedback and discussions can be more important. Research clearly shows that interest and interaction about employee development and performance significantly affect motivation and engagement.

The performance review system documents and formalises the planning process. It is a part of the process, but it does not stand alone. It is the implementation of the plan that is the key to success. Training has to be organised. Development opportunities have to occur. Performance needs to be monitored. If monthly targets have been set, they need to be monitored and reviewed. Promises that have been made have to be kept.

The performance review process will not work if you only think about it when it is time to do the annual review again.

Summary and reflection

The Performance Management (PM) section of this website explains the main features and requirements of a performance review system.

Over the years, my own personal experience in conducting reviews or being reviewed has been very positive. My performance review consulting activities have reinforced my beliefs. Consequently, despite the negative press, I believe that a formal and informal performance review process helps rather than hinders individuals and organisations.

What has been your experience?

If you are a manager, and you do not have a performance system in place, is now the time to think about it?

Are you helping your employees to grow and develop?

Articles quoted above

"Straight Talk About Job Appraisals - an article in Management Today, the national AIM (Australian Institute of Management) magazine on the perceptions of performance review systems.

Research - this article reveals valuable performance research information gained from employee surveys. The findings highlight key leadership actions that dramatically improve team performance.

Performance Management (PM) - the section of this website that explains the main features and requirements of a performance review system (contains links to other performance review articles).

Related article

Financial and non-financial rewards - an article explaining the use and benefits of both financial and non-financial rewards.

Dealing with positive employee performance - an article explaining the consequences of not providing employee performance feedback.

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