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Four Reasons for a Performance Review February 27, 2014

Posted by Tim Rodgers in Management & leadership.
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Lately I’ve been involved in some discussions on LinkedIn about performance reviews, what’s wrong with the process, and whether it can be improved. I’ve written about this topic before (see In Defense of the Performance Review), but at the risk of repeating myself, I’m going to briefly re-visit this topic.

I see four important reasons for a business to have some kind of regular process to meet with an employee and discuss their performance:

1. Review the employee’s performance for the previous period. If nothing else, this is just good management practice. It’s an opportunity to directly reinforce what the business values (and wants to see more of) and what the business does not value. If specific tasks or performance targets were previously assigned to the employee, this is a formal discussion of what was accomplished and what was not.

2. Set the terms for the next period’s assignment. Looking ahead, what are the objectives that the employee is expected to achieve? Ideally, this should be expressed in concrete terms with measurable outcomes (the old SMART acronym applies here). Business priorities may change, requiring an update to these objectives, but there should be no confusion about what was expected.

3. Discuss a development plan for personal growth. There are two ways to look at this. From a “strictly business” standpoint, the employee is an asset that will lose value over time without regular maintenance and improvement. From a more enlightened standpoint, employees perform better when their personal objectives are aligned with the business’s objectives.

4. Finally, link performance to increased compensation or other rewards. There should be some connection between the two. I’m not advocating a strict bell-curve approach to performance ranking and salary administration, but it seems clear that higher performing employees should receive a larger share of the company’s financial gains that they helped to achieve.

The details will vary, but those are the essential elements.



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