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Why Annual Performance Reviews Are Valuable

By Mike Detmer January 13,2014

Mike Detmer ( is the principal of Detmer Business Solutions, which provides companies in the systems integration space with easy-to-use business knowhow modules that enable functional managers to better execute key duties.
With the holidays just around the corner and my family spread from Florida to California I decided to send everyone personalized gift boxes. For my sons, who enjoy cooking, I sent spices, sauces, and a homemade cookbook detailing some family recipes that I know they love. After desktop publishing the cookbook, I loaded the file onto a jump drive and headed off to my local office supply store, a national chain, to be printed and bound.

Not hard stuff, or so I thought. That was until I stood in line for 25 minutes behind only one customer while three clerks stood around idly unable to help me. When I asked why the delay, a clerk told me that only one of three computers in the store was able to read a jump drive. That seemed unacceptable to me considering that there was a sign on the counter that said, “We Service Computers.” Because this was the second time I’ve experienced slow service, I confronted the manager with the situation, and he told me, in a dismissive tone, that he’s been working on it for three weeks.

At that moment the senior executive in me came out, and I wondered who managed this dimwit. Working on something and getting something accomplished are two different things. But frequently, employees and their managers feel that working on something regardless of the output they are producing is doing their jobs. This is a false notion.

Examples like my experience point to why it’s so important for companies to conduct employee performance reviews, regardless of how large or small they are. Performance reviews are a valuable management tool for both the employer and the employee. They provide a forum for employees to present their obstacles to accomplishment and for managers to provide valuable coaching that will steer employee activities toward achieving the company’s desired goals.

If you didn’t conduct employee performance reviews in 2013, start 2014 off right and review every employee’s performance using these guidelines:

Prepare your employees: You can do this by asking your employees to each complete a “self-assessment” of their past performance. If you need an example of what a self-assessment looks like, you can download one from the Microsoft Office Templates page and then modify it to best suit your needs.

Prepare yourself: While the reviews should only last an hour or so, you should invest the time to think through what you want to tell each employee about their individual strengths and shortcomings and how you expect them to focus and improve going forward. To help, have a script to refer to regarding past performance, company expectations, and individual performance expectations.

Prepare the environment: Conduct the reviews in a space that is conducive to a discussion and where you and your employee can feel comfortable. That way the meeting takes on a persona of being important, yet personally tailored to him/her. I suggest a quiet area with a small table that you can sit around. Not your office or a room with a large desk or table separating you.

Begin with an agenda: Point out the few areas to be covered in the review session. They can be as simple as a) employee’s past performance, b) employee’s current performance, c) goals and objectives the employee is charged with in the upcoming year, and how these goals tie back to the overall company’s goals, d) employee’s personal development path, that is the things they can do that they will benefit from.

Performance reviews provide a forum for employees to present their obstacles to accomplishment and for managers to provide valuable coaching that will steer employee activities toward achieving the company’s desired goals.
Set an open tone:
Encourage open and honest communications and give them that in return. Talk about what you believe the employee’s strengths and shortcomings have been and make suggestions for improvements. Be assertive in that you are giving the review based on your observations, but also encourage employee feedback to understand what they think as well.

Give praise and criticism where due: With cost cutting procedures, giving employee rewards with praise can go a long way. But be sure to point out shortcomings and provide advice on how to mend any performance gaps or attitudinal adjustments required. Make note of these areas for future discussions should they be necessary.

Don’t tie performance reviews to pay increases: While it’s OK to consider the outcome in a performance review when contemplating merit raises or bonuses, keep the review strictly about performance. Just the facts Ma’am, is the best route to take. If asked about merit increases, explain that they are handled separately, and this review is strictly about the employee’s performance.

Synergize in conclusion: During the review, be sure that you and your employee are on the same page. After each section, be sure to ask if your employee understands and agrees with your direction for the future. This way both of you have a common understanding and a springboard to work from going forward.