It’s been reported in some business circles that the annual performance review is dead. But don’t be too quick to jump on the anti-performance review bandwagon. Conducting formal employee performance appraisals is still a good idea for businesses, for a number of reasons.

Here’s the key: The benefits of performance reviews can outweigh the negative implications as long as you use the evaluation process to set clear expectations and evaluate performance against measurable goals, and not just to assess past performance in a subjective way.

Benefits of Performance Reviews

Seven reasons why employee evaluations are still a good idea:

1. Clarify expectations

   Regularly scheduled performance reviews provide an opportunity to clarify job roles and answer questions the employee may have about performance expectations. You can address questions or issues that might not get air time otherwise.

2. Provide direction

   Performance evaluations don’t have to be annual. You can hold monthly or even weekly meetings to provide guidance, feedback and direction. The more frequent and specific your feedback is, the faster your employee can implement any changes needed.

3. Set goals

   Modern employee reviews are more forward-looking than backward-facing. Creating specific long- and short-term goals (which your employee contributes to establishing) helps your employee and your business move in the right direction.

4. Keep rewards fair

   Annual reviews can help in determining which employees receive promotions or raises based on reaching performance goals, as well as providing documentation of your established criteria for promotion.

5. Motivate employees

   Offering positive feedback on a regular basis and recognizing your employees’ hard work in a formal way can be great motivation to continue exceptional performance.

6. Provide a document trail

   On the other hand, if you experience problems with an employee’s performance or behavior, written reviews provide a way to document issues and outline the specific corrective steps needed for continued employment.

7. Solicit feedback

   Performance reviews provide an opportunity to gather feedback from employees about how the company operates, what the supervisor can do to better support the employee and processes that may need improving.

Types of Performance Reviews

When it comes to performance reviews, best-practice standards are changing. From continuous feedback to weekly meetings, the performance review is no longer just an annual event. Here are some common types of employee reviews used today:

Performance appraisals. Regular performance appraisals designed to assess progress, measure performance and revisit priorities can help keep an employee on track. Avoid letting employee reviews focus only on criticism, and be sure to include suggested actions and clear goals.

Employee self-evaluations. Some companies ask employees to provide a self-assessment of their performance in relation to goals set the previous year. Including this step can make the process feel more fair to employees, since they are given the opportunity to highlight their efforts and document successes that can sometimes be overlooked by a supervisor.

Coaching approach. Some companies have ditched the idea of structured annual performance reviews in favor of a more personalized method of giving frequent feedback. A coaching-based approach focuses on providing employees with real-time, even weekly, feedback on progress toward specific goals.

360-degree (multi-rater) feedback. A 360 evaluation provides feedback from everyone every employee interacts with on a regular basis, rather than just a supervisor.

Evaluation is based on criteria such as effectiveness of interactions and communication with others, reliability, ability to achieve stated goals, and overall performance. There are pros and cons to this approach, not the least of which could be insincere or retaliatory feedback by co-workers.

Whatever method you choose to evaluate employee performance, be sure that you communicate expectations clearly to all team members. Establishing a consistent procedure is key to motivating employees and driving high performance.

When Employee Performance Issues Arise

Sometimes you’re faced with employee performance or conduct issues that require careful handling. The Progressive Discipline Smart App from HRdirect can help you take control of the situation. It will guide you in creating appropriate documentation to address employee issues promptly and provides the necessary backup in case termination becomes your only option.