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Employee Engagement Performance Reviews Performance Management

What is a Performance Review, and Why Do They Matter?

June 1, 2023
6 min read

Performance Review Template Bundle


Performance reviews aren’t what they used to be — and that’s not a bad thing. After many companies postponed, restructured, or canceled them altogether in the past few years, the way we handle performance appraisals has changed permanently. Performance reviews are no longer the infrequent, intimidating meetings they once were. We’ve learned a lot about which review strategies actually help employees understand how they’re doing, what they need to do to be successful, and how they can improve.

We know that effective review processes are made up of a combination of regular evaluations, ongoing conversations, and supportive, encouraging managers. When done well, your performance reviews can boost engagement, promote productivity, and motivate employees to do their best.

Find out more about the value of performance reviews and how to give employee assessments that have an impact.

Learn why #PerformanceReviews are essential — but with a modern approach:

What is a performance review?

A performance review is a recurring standardized evaluation of employee performance by their manager over a certain period of time. Managers and employees discuss what the employee has accomplished since their last review, their strengths and areas for improvement, and any outstanding contributions they’ve made. It’s a two-way conversation during which the participants review the employee’s goals and their outcome or progress toward those goals, the skills they’re working on, and any challenges they’re facing.

Performance reviews ensure that employees:

  • Know what’s expected of them
  • Have the support and resources they need to do their job
  • Are fairly evaluated on their performance
  • Are fulfilling their role responsibilities as expected

Performance evaluations are also an opportunity to set new performance goals and discuss how the employee will reach them, their strengths and weaknesses, and their overall career goals. Review results help managers spot high-performing employees and take steps to resolve performance issues quickly. They also allow your company to compare performance across different departments, teams, and individuals so you can identify best practices, share knowledge, and drive improvements in performance across the organization.

Why performance reviews are important

The definition of a performance review alone doesn’t cover why they’re an essential part of managing your people. It’s a pivotal part of the employee experience: 80% of employees say professional development is an important consideration when job searching. They’re 3.6 times more likely to say they’re motivated if they receive daily feedback from their managers.

Your review process can include strategies to aid employees in their growth and development. It can increase trust between managers and their team members with frequent performance conversations. It empowers employees, assuring them that they’re on the right track, that their work is noticed, and that they’ll get the support they need to do their best work.

How to give more effective reviews


  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Timely

Help your managers conduct formal assessments that support employees’ growth and development with these employee performance review tips.

1. Set SMART goals.

Goals are the basis of effective reviews, telling employees what they need to accomplish and serving as a way of measuring productivity. The SMART goal-setting method is a proven approach that increases the likelihood that employees will reach their goals.

Read our post for more examples of performance review goals.

2. Discuss performance more often.

Did you know 49% of companies conduct performance reviews just once or twice a year? Despite their pervasiveness, discussing performance at annual reviews alone will not improve overall performance at your organization. Even if you also give mid-year performance reviews, those conversations shouldn’t be the only time employees and managers talk about their work performance.

Effective performance reviews are bolstered by ongoing conversations about how employees are doing. Receiving meaningful feedback in the past week means employees are four times more likely to be engaged at work. High employee engagement results in a workforce that is more productive, loyal, and creative.

49% of companies give #PerformanceReviews just once or twice a year. But that could be backfiring if that’s the only time you’re discussing employee performance:

3. Talk about the future.

61% of HR professionals said a lack of career advancement opportunities was a top three cause for turnover. Performance reviews are an excellent way to find out what employees do best, where they want to grow, and where they see themselves in their current roles and beyond. Managers can help employees at every step, pointing out their strengths, offering support and suggestions, and planning how they can achieve their short and long-term goals.

Ask better questions to give more effective performance reviews. Check out 13 examples of performance review questions for managers.

Embracing efficiency with performance review software

There are tons of benefits of performance review software for everyone from the employee being reviewed to your company as a whole.

Employees get:

  • Fair reviews via standardized, transparent processes
  • Closer collaboration with managers via shared 1:1 Workspaces
  • Goal-setting tools to stay on schedule and track their contributions and accomplishments
  • Reviews they can complete on their mobile devices
  • Motivating insight into how their goals fit into team and business objectives

HR teams get:

  • A variety of performance review types, including 360 reviews and self-assessments
  • Automated review cycles and reminders
  • Ready-to-use performance review templates and best practices guides
  • Easy digital recordkeeping
  • In-depth reporting and analytics using real employee performance data

Using software to handle your performance review process is great not only for productivity but also for company culture. A transparent, fair, consistent process that’s easy to understand increases trust and provides employees with the support they need to achieve their goals.

Are you wondering how to approach performance reviews this review season? Do you want to take the first steps toward a modern performance review process? Want to compare your process to what the experts advise?

Download our bundle of performance review templates and expert-informed best practices guides. Together with performance management expert Erin Riska, ClearCompany developed review templates for different types of employees based on best practices.

We’re sharing five templates and their best practices guides to get your next review season started:

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

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