Performance reviews became necessary as soon as the first worker was employed. For good or bad, performance reviews are an absolutely essential part of the workplace; properly administered, such reviews have been shown time and again to be enormously positive and motivating forces in employees' lives by helping them identify their strengths and weaknesses and by encouraging them to achieve even greater successes -- and avoid comparable failures -- in the future. Improperly administered though, performance reviews can be the source of an enormous amount of controversy and friction within an organization; improperly administered performance review programs can also result in legal action against the employer. Taken together, it quickly becomes clear that providing workers with timely and accurate feedback concerning their performance is a vitally important function within almost any organization, but many managers are either unable or unwilling to provide such reviews for a variety of reasons. The underlying constraints to effective employee performance reviews are discussed in detail in this review, including what steps managers can take to ensure that employees receive the performance review they deserve and need, followed by a summary of the research in the conclusion.
An Examination of the Importance of Accurate and Timely Staff Performance Development Reviews
For better or worse, surveys of employees all over the world have shown that the vast majority of organizations use some type of performance appraisal to keep track of employee performance and to provide them with timely and accurate feedback about what they are doing right -- and wrong. Although there may be some important societal or organizational cultural considerations involved that make some people more comfortable with open discussion and where it is acceptable for managers and their employees to give and receive feedback; however, these cultural differences are not an excuse for avoiding the review and discussion of performance. In fact, all organizations and managers should make certain that all their practices and behaviors are appropriate and sensitive to the needs and aspirations of their employees. Performance appraisals will undoubtedly add pressures on managers' time and they might also be a source of disappointment or discontent for employees who feel they are treated unreasonably; however, a recent study reveals that, for a majority of more than 35,000 people it surveyed, the annual appraisal process was found to 1) encourage employees to feel valued, 2) it engendered a sense of personal and career development, and 3) it increased organizational commitment.
For whatever reasons, in many aspects of their working lives, people who receive timely and accurate performance appraisals have been found to be significantly more satisfied and feel significantly more positive than those who do not.
To determine how managers today can successfully implement and administer an effective employee performance review system, this paper examines the peer-reviewed and scholarly literature to identify what factors are regarded as important from both the employee's perspective as well as from a management perspective. An analysis of the implications of both positive and negative performance reviews will be followed by an examination of the legal and ethical implications of the review process. A summary of the research, salient findings and relevant recommendations will be provided in the conclusion.
Background. Besides driving a vehicle in heavy traffic, managing other people and making performance judgment calls has always been one of the most difficult things most people are ever called upon to accomplish in the workplace today; however, the need for such performance reviews has long been recognized and it is likely that this process was implemented shortly after the first worker drew wages and agreed to abide by certain conditions. Thereafter, Rudman suggests that, "Ever since, employers have been making judgments about their employees: Are they doing what we want them to? How does this person's performance compare with others? What are this employee's strengths? What training does that employee need? Shall we give this employee a salary increase? Or promote that employee?"
A major issue in understanding employee motivation is associated with the way people feel about their jobs. According to Risher, early research into employee motivation in the 1950s linked motivation with job satisfaction; the findings from this research indicated that there were specific factors that contributed to job satisfaction, including: achievements, recognition, responsibility, opportunities for advancement, and the work itself.
More recent thought on employee motivation, though, has shifted to one that seeks to develop employees who will identify with the goals of the organization and who will be proud to be associated with the company. To the extent that these goals can be accomplished is the extent that employees will likely remain highly satisfied with their work, and who will be motivated to work even harder at helping the company achieve its organizational goals in the future. "A dedicated employee is willing to put discretionary energy behind something without being monitored or supervised," Risher says. "It's about working hard because the individual believes in the goals of the organization. Those two actions -- intentional engagement and discretionary energy -- are evident whenever someone works hard to accomplish something, from a Pete Rose in baseball to the police and firemen who worked to save people on 9/11."
The commitment of an employee to a company's goals remains a powerful motivator, and the resulting job satisfaction is equally important and clearly contributes to a healthy work experience; however, when workers commit themselves to the success of a company and understand that they are empowered to resolve day-to-day problems, they will be willing to do almost anything necessary for continued success. Risher suggests that, "Of course they experience satisfaction but that is after-the-fact and not what drives their efforts."
Given the importance of employee job satisfaction and motivation in the workplace on a company's bottom-line, identifying methods by which these can be facilitated is clearly an important goal for managers today; these issues are discussed further below.
Impact of Positive and Negative Performance Reviews. The vast majority of employees report that recognition for a job well done is an important consideration in how they feel about their jobs.
The notion that employee recognition can serve as a powerful reward is certainly not new, though; for example, early on, Herzberg pointed out that consistently and frequently applied formal and informal recognition programs provide management with a powerful tool to influence employees to live the company's values and implement its focused mission.
In this regard, he was emphasizing the importance of reinforcing behaviors that contribute to organizational success. "By specifically reinforcing expected behaviors," Luthans advises, "leaders signal to employees that their efforts are noticed and appreciated."
Given the powerful nature of such reinforcements, then, it is little wonder that they have attracted such attention in recent years as companies seek better ways to retain qualified and hard-working employees while attempting to improve the performance of those who may not be measuring up to the company's standards. In this regard, there are two basic types of rewards that managers can use to positively reinforce performance-enhancing behaviors among their employees; the first is fairly straightforward and simply involves monetary rewards. According to Luthans, "Certainly pay plays an integral part in rewarding employees and reinforcing positive behaviors. This is especially true of pay-for-performance systems which seek to reward individuals or teams in a direct relation to their contribution to organizational success."
Studies have shown time and again that when they are properly implemented and administered, pay-for-performance initiatives represent impressively strong motivators that can have a significant impact on the bottom-line performance of almost any company. Therefore, the effectiveness of monetary incentives, particularly when they are directly linked with performance outcomes, seems apparent; however, frequently overlooked in this analysis is the importance of also providing employees with non-financial rewards such as timely recognition and attention from management. This latter type of reward has also been shown time and again to be very effective and efficient because: 1) it is free or relatively low cost; 2) it is available for everyone to use; and 3) no one receives too much of it.
Effectively administered performance review programs are worth the investment in time and energy as they have been shown to improve employee retention, improve job satisfaction, and spur employees on to even greater heights of performance. "In any good motivational system," Denton says, "it is essential to have some way to track employee performance."
Despite these considerations, in almost all work settings, the majority of workers' performance ratings will be relatively similar to all others because most of the differences in their work are subtle, or subjective, or are simply regarded as being unimportant by the manager. In fact, Gellerman reports that the most common performance rating, by far, is "above average"; while this is a statistical impossibility, certainly, this trend clearly indicates that most managers are either fairly satisfied with the work of the majority of their employees or they are reluctant to officially label another person as being "below average."