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Employee Engagement Performance Reviews Performance Management

Are Performance Reviews Effective? The Value of Employee Performance Reviews

December 13, 2022
7 min read

Expert-Built Performance Review Templates Bundle


We’ve made it to performance review season once again. The end of the year is traditionally the time when managers and employees take an intentional look back at how the employee performed over the course of the past year — or six months, if your company does semi-annual reviews, too. But this year, you may be wondering whether or not to give reviews at all. 

Conducting reviews is not an easy process, and just 28% of CHROs say annual performance reviews accurately reflect how employees are doing. Employees don’t love them, either — only two in 10 say their performance evaluations are motivating. Not to mention, lots of companies adjusted their review process during the pandemic, and now, employees’ expectations have changed. 

But, that doesn’t mean formal reviews are futile. When done well, reviews can increase employee engagement and retention and improve performance.

#EmployeeReviews are highly effective — when done well. Find out how to get employees on board with #performancereviews:

Bad vs. Good Performance Reviews 

One thing is for sure when it comes to performance evaluations — bad performance reviews will not be effective. Reviews that are negative, unexpected, infrequent, or pointless have a damaging effect on those important performance metrics. 85% of employees said they would consider looking for a new job after a bad review, which can also negatively impact motivation and productivity. 

At many companies, performance review season is when employees get the most constructive feedback from their managers all year. But, 92% of employees want to hear feedback more often than just once a year. If employee feedback, recognition, coaching, and other performance conversations are crammed into a one-hour review, it’s unlikely that your company is helping its team members reach their full potential.

Check out the ultimate performance review guide and create the best reviews for your employees.

On the other hand, good performance appraisals are not your entire performance management plan, but one component of it. They make employees feel supported and motivated to achieve their goals. Using different types of reviews, including 360-degree and peer reviews, helps increase fairness and represent performance more accurately. Good employee performance reviews ask employees to participate in the conversation and work with their managers to set new goals.

There are many factors of employee reviews that make them part of an effective performance management system. Here are a few traits that indicate your reviews are on the right track:

  • Employees receive continuous feedback outside of formal reviews. 
  • Your reviews are given on a regular basis and employees know when to expect them.
  • Employees know the criteria for performance review ratings. 
  • Managers receive training on how to give fair, constructive performance reviews.
  • Performance reviews include discussions about the future, both areas for improvement and career development opportunities.
  • Employees are able to bring their own topics of discussion and provide feedback to managers, too.

Share the Value of Performance Reviews 

Due to their reputation, performance reviews require employee buy-in to be as effective as possible. Here are three performance review tips for how to help employees see the value of performance reviews.

Get 3 tips for helping your employees see the value of #performancereviews this #review season:

1. Communicate the “why”

It’s a lot easier to get employees on board with performance reviews if they understand the purpose of the review and know what to expect.  Here are some of the basics your employees should know:

  • Who will participate in their performance reviews
  • What type of review will take place and what will be discussed 
  • When reviews will happen throughout the year
  • Where the review will happen (whether in-person or virtually)
  • Next steps after the review

2. Take action after giving reviews

If there’s no follow-up after a review, employees won’t have any reason to work toward goals that were set. Show employees that performance reviews matter by taking action on what was discussed. For example, a manager may discuss signing up their direct report for a certification course or offer extra coaching in one of their strengths. If they don’t follow through, employees will likely feel that performance reviews don’t actually help them improve. 

One of the main purposes of employee review software is to help make this step easier. Employees and managers can take notes and create action items in their shared private workspace. Thanks to cloud-based software, the workspace is accessible from anywhere and shows the most recent updates. And, it’s not limited to just performance review season — managers and employees can use their shared workspace all year long.

3. Bake feedback and recognition into company culture

The statistics show that recognition and frequent feedback create engaged, motivated employees. The statistics also show that it’s not enough for employees to only receive these at performance review time. Managers should talk to their employees about their performance at least once a week to increase engagement, not just during formal reviews. They should also make an effort to make employees feel appreciated on a regular basis — 69% of employees say they would work harder if they felt recognized. 

One of the biggest performance review software benefits is that it makes it easy to give feedback and recognition regularly. In addition to automated performance review cycles, a variety of review types, and tools like shared digital workspaces, performance management software also can automate recognition and attach it to future reviews. 

With software, any employee can give teammates kudos or congratulate their achievements publicly. Then, that message is linked to the recognized employee’s profile and included in their next performance review for managers and other leaders to see. 

These tools help build recognition and feedback into your company culture instead of relegating them to private conversations. Employees who feel appreciated and understand how they’re doing outside of performance reviews are more satisfied, hardworking, and loyal to your company.

Build trust with your employees and regularly give them advice, coaching, and feedback — when things go well and when they can be improved. Ensure that you are giving feedback from a place of helping your employee succeed. Don't wait weeks or worse, months, to give feedback. Give it "in the moment" and then when you get to the more formal review, nothing should be a surprise.

- Jennifer Dill via Forbes

Get the Templates for Better Performance Reviews

Take the first step toward developing a more effective performance review process at your company with these review templates pulled from ClearCompany’s template library. You’ll get access to five templates designed by performance management experts and our own ClearCompany specialists with today’s best practices in mind:

  • 360-Degree Review
  • Annual and Semi-Annual Review for Exempt Employees
  • Annual and Semi-Annual Review for Non-Exempt Employees

Download ClearCompany’s Performance Review Templates here.

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