The performance review can be an effective tool in improving performance. However, don’t get locked into thinking of reviews as an annual event, you may find a greater benefit in having them more often than just once a year.

Constant, effective, manager and employee dialogue can help to keep performance focused and identify any problems early on. Thus they can be addressed and solved before they affect the success of the company.

The performance review process consists of observing, gathering data, and documenting. As part of an effective performance management system both Manager and Employee should maintain these three activities throughout the year. Discussions based on vague judgements, rather than recorded facts or statistics, create negative feelings and do not aid the improvement process. For example, stating, "Your performance is poor" is not nearly as effective or informative as "Last month, your production figures were down by 20%". If the discussion is focused on more concrete and specific aspects of performance it makes it possible to work together to resolve, the issues at hand.

The performance review meeting itself needs to be documented to provide a summary, on paper, of the discussions, conclusions and action plans that are decided upon and can be kept in the employee’s personal file for future reference. This sets clear goals for the employee and employer to work towards.

You may also find when you diagnose a problem with an employee, and formulate a successful plan of action to remove a barrier, the same issues apply to others in similar roles. This process therefore not only helps you to improve the performance of one employee, but can also provide insights and information that can improve the performance of many employees.

Ongoing communication throughout the year also allows "shifting gears" - changing the parameters of an employee’s job when it is required. Details of performance expectations can be altered and performance plans can be revisited. Thus allowing a continuous feedback loop making it possible to respond very quickly to changes in the working environment.

The final step in the performance review process is follow-through and follow-up. That means ensuring commitments are being kept, and monitoring progress of the implementation plans. It is easy to assume that any plans and commitments emerging from the performance review and diagnostic process are being followed – do not assume! If those plans do not turn into actions, the value of the entire process is lost. However, when the performance review is used to its maximum potential it can facilitate and be the impetus for positive change and growth in an organisation.

Source: "Manager’s Guide to performance Reviews" – Robert Bacal