It’s that time of year again, for your Annual Performance Review (also referred to as appraisals). Some employees are dreading it, some can’t wait for salary increases, but does your company know why reviews are at the core of building an amazing culture and optimising performance? There are several benefits for both employers and employees. Here’s what you need to know.
Firstly, if you’re company has a performance review, this gives credibility to the fact you even have a system in place that shows you care about your employees, their performance, career development and you want to give them recognition and reward where it’s due. They are an integral part of your team and culture and this is their time to hear it.
On the flip side, maybe there have been numerous performance issues across the company or several departments in the last year, and you really need to start doing something about it. Sometimes it feels like the blind leading the blind, and it’s time for managers to reset expectations, align goals and have those difficult conversations.
So if you’re a company thinking about initiating its first annual review, or your an employee wondering what it’s all about, here are some benefits to why they are essential:
1. Feedback: Performance reviews provide an objective and structured platform for employees to receive positive and constructive feedback on their work. It also allows employees to give their honest feedback to their manager of how they think it’s going (highly recommended). This two-way approach keep things fair, consistent and encourages both the individual and their manager to understand their strengths and areas for improvement. Giving feedback fosters a positive, collaborative and professional approach to development and career progression.
2. Goal setting and alignment: Performance reviews often involve setting goals for the upcoming year. This helps align individual objectives with the organisation’s goals, ensuring that employees' efforts contribute to the overall success of the company. This is a good time to realign goals for 2024 and give meaning to the work that is being contributed. When the employees succeed, the company does too.
3. Recognition and acknowledgment: Everyone deserves to receive positive feedback. Annual reviews provide an opportunity to give recognition and reward where it’s due; boosting morale, motivating employees, and reinforcing positive behaviour. Sometimes managers are so busy with their own tasks, they have limited time to sit down, reflect and give acknowledgement to their achievements. This is a great time to do it - and reward it :)
4. Communication: Regular communication between employees and managers is essential for a healthy working relationship. Reviews facilitate open and honest communication about expectations, challenges, and opportunities for development.
5. Training & Development: Employees can identify skill or knowledge gaps or areas where additional training may be beneficial. Gathering this information now allows for targeted training and development programs in the year and will not only overall enhance performance output but keep your employees engaged as the company invests in them.
6. Succession Planning: Assessing employee performance helps in identifying high-potential individuals within the company. This information is particularly valuable for succession planning, ensuring that the company have a pool of qualified individuals ready to take on more significant roles, or plan relocations across multiple business locations in the future.
7. Fairness and consistency: When conducted systematically and objectively, they contribute to a fair and consistent evaluation process. This helps in avoiding bias and ensures that employees are assessed based on their actual performance rather than subjective judgements. This mitigates any risks to performance issues down the line.
8. Employee engagement: When efforts are recognised and appreciated, they feel motivated. That’s human nature. Engaged and motivated employees are more likely to be productive and committed to their work. Resulting in increased performance and a more successful year for the business!
9. Salary benchmarking: High-performing employees may be eligible for salary increases, bonuses, or other incentives. It’s also a good time to start salary benchmarking against the market so companies can remain competitive and retain top talent.
10. Legal Protection: Documentation of performance reviews can serve as a legal safeguard for employers. In case of disputes or challenges related to employment decisions, having a record of performance assessments can provide evidence of fair and reasonable evaluations!
While performance reviews offer these great benefits, it's essential for these to be complemented with ongoing feedback, regular check-ins, and a culture of continuous improvement!
If you're a business looking to initiate your own performance reviews get in touch with us!
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