Hone Your Skills

What Is a Performance Review & Why Do They Matter?

September 10, 2022
5 min read

Employee performance reviews are an essential part of performance management for any business. Performance appraisals provide a way for employers to assess the performance of their employees and identify areas in which they may need improvement. Annual performance reviews can help employers decide whether or not their direct reports are meeting the standards set by their job descriptions and deserve a raise or bonus.

One of the most crucial things to remember when strategizing employee performance reviews is that they should be fair and unbiased. This means considering all aspects of work performance, both good and bad.

It's also important to be realistic about what can be achieved within a given timeframe and to set achievable employee goals. You should regularly schedule and communicate check-ins to employees on time.

Poised shares more information and advice for planning and conducting performance reviews.

What Is Performance Evaluation?

An employee performance rating is a way for employers to check how well their employees are doing. It's a formal assessment through which they usually talk to the employees and look at their work. This helps employers ensure that their employees are meeting the established standards and identify any training or development needs that employees may have.

Formal performance reviews can be conducted either in person or online, depending on the company's preference, needs, and abilities. Many companies today hold performance reviews via a video call or chat software; it's common to conduct in-person reviews in a meeting room or in the employee’s regular work environment.

What Are the Key Aspects of a Performance Review?

There are a few critical aspects that performance reviews should cover to be effective. These include:

  • Feedback and Follow-Ups: Performance reviews should provide employees with feedback on their work performance. Whether positive or negative, feedback should be specific and objective. Instead of demotivating employees, feedback should help them practice self-evaluation and find areas to grow and improve.
  • Development: Performance reviews should also identify any career development needs that employees may have. Training and coaching can help them improve their performance.
  • Goal Setting: Performance reviews should start with setting goals. This will give employees something to aim for and help the employer track their progress.

Let's discuss in more detail what makes for an effective performance review:

Highlighting an Employee’s Strengths

Employee performance reviews are an excellent way to not only identify areas in which an employee may need improvement but also to identify their strengths. When conducting a performance review, it's essential to focus on the positive and the negative. This means highlighting an employee's competencies and any areas in which they need development.

Employers can use performance reviews to identify an employee's strengths and capitalize on them. For example, if an employee is good at meeting deadlines, the employer can assign them projects that require a quick turnaround. If an employee is skilled at problem-solving, the employer can give them tasks that require creative thinking.

Employers who take the time to identify and capitalize on their employees' strengths will find that their team is more productive and efficient. Further, employees who feel valued and appreciated are more likely to be engaged and motivated. This can have a direct relationship to work habits: research shows that the more engaged employees are, absenteeism lowers by 41%.

Discussing Areas That Need Improvement

Performance reviews allow you to talk with an employee about specific areas of their job they can improve. Reviews give employees performance feedback, show them what they need to work on, and identify any areas in which they may require additional training. Employees who know what is expected of them are more likely to be successful in their roles.

Reviews also allow employees to air their grievances and offer suggestions for improvement. If employees feel like their job is in danger, they may be more likely to take their performance review seriously and use it as an opportunity to improve. Following the review conversation, an employer may see the employee’s work quality and dependability transformed for the better.

What's more, performance reviews can help you identify any areas in which your company's policies or procedures may need to be changed. For example, if you notice many employees having difficulty with a particular task, you may need to revise your training templates or procedures.

Using Peer Reviews

To be effective, performance reviews must be based on accurate and objective information. One way to collect this information is through peer reviews and employee feedback.

Peers can provide a more realistic assessment of an employee's performance than managers since they're less likely to be biased or influenced by personal relationships. Peer reviews can also help to identify areas in which employees need support or additional onboarding help.

When conducting peer reviews, you must ensure all employees are given the same standards and expectations to judge each other against. It's also essential to maintain confidentiality so that employees feel comfortable giving honest feedback.

Overall, peer reviews can provide valuable insight into employee performance and help managers create a more effective performance review process. In fact, Harvard Business Review believes that peer reviews could soon replace that of a single manager, especially in remote working environments. 

Checking on Current Goals

Employee performance reviews are crucial for checking an employee's progress toward goals. They also provide an opportunity to discuss potential roadblocks that may prevent employees from meeting their goals. By discussing these issues early on, you can help the employee stay on track and reach their goals.

Here are a few examples of professional development goals for which you might evaluate your employees' performance:

  • Meeting deadlines
  • Achieving targets or quotas
  • Maintaining quality standards
  • Improving customer satisfaction ratings
  • Reducing safety incidents

The importance of individual goals contributing to overarching company goals cannot be overstated. When employees are held accountable for meeting specific performance objectives, it helps ensure that the company is moving in the right direction. Furthermore, it can motivate employees to do their best and strive for excellence.

Setting Goals for the Future

In addition to evaluating an employee's performance against current goals, performance reviews are also an opportunity to set new goals for the future. These performance goals should be specific, measurable, achievable, relevant, and time-bound (SMART).

For example, rather than setting a goal of "increasing sales," a SMART goal would be "increasing sales by 10% within the next quarter." This goal meets all the requirements of a SMART goal.

Here are a few more examples of goals to assign employees:

  • Reduce customer churn by 5% within the next six months
  • Improve product quality ratings by two stars within the next year
  • Achieve a 95% on-time delivery rate for all orders within the next quarter
  • Respond to all customer inquiries within 24 hours

When setting performance goals, you must involve the employee in the process. Employees are more likely to be engaged and motivated if they have a say in their goals. They're more likely to achieve goals that are attainable and aligned with their skills and abilities.

Once goals have been set, performance reviews can be used to track an employee's progress and identify any areas in which they may need assistance. By regularly monitoring goal progress, you can ensure that employees are on track to meet their objectives.

What Do Performance Reviews Help You Accomplish?

Employee performance reviews are a way for managers to provide feedback to employees about their performance and track progress over time. Reviews help managers determine what employees need to continue doing well and identify areas where employees need improvement. They also boost employee engagement while helping the entire team stay on track and focused on meeting their goals.

Let's dive deeper into the main benefits of performance reviews:

Communicate Expectations to Employees

Employees need to know what is expected of them to meet goals and contribute to the company's success. This communication should happen at the beginning of the performance period so that employees are clear about what they need to do.

In addition to setting expectations, performance reviews provide employees with feedback about their performance, which can help them understand what they're doing well and where they need to improve. Establishing clear expectations and maintaining open lines of communication with your team can help you avoid many unnecessary problems while boosting efficiency and productivity.

Encourage Your Employees To Keep Growing

Employee performance reviews provide an essential opportunity for managers to encourage employees to keep growing in their roles. By providing a platform for open dialogue, performance reviews allow team members to discuss their goals and aspirations with their managers and to receive negative and positive feedback on their work performance.

This helps them identify areas where they may need to continue improving, stretching their skills, and moving their careers forward.

Performance reviews can also help to identify any potential development needs that employees may have, which can be addressed through appropriate training and development programs. And if the employee is surpassing expectations, a review period is the ideal time to request a raise.

Ultimately, performance reviews provide a valuable opportunity for managers and employees to learn and grow together, continue building solid and productive working relationships, and foster a healthy company culture.

Discipline Employees Where Necessary

When it comes to performance reviews, one of the most important things that managers and leaders need to be aware of is when an employee needs to be monitored closely. A performance review can help identify when an employee is not meeting the standards set by the company and may need to work harder (or smarter) to improve their performance.

Disciplining employees is never easy, but it's necessary in some cases. Leaders must learn to identify when an employee is not meeting expectations and how to take appropriate action. This may include an action such as a warning, a suspension, or even termination.

Common reasons for disciplinary action include:

  • Attendance issues
  • Poor performance
  • Breaking company policies
  • Attitude problems
  • Anger issues

Remember that disciplinary action should only be used as a last resort after other methods, such as coaching and training, have been unsuccessful. And, of course, it should always be done fairly and consistently.

A performance review can be a valuable tool for leaders when it comes to disciplining employees. It can help identify performance issues early on and allow for corrective action before they become bigger problems.

Get Feedback From Employees

Performance reviews allow leaders to receive feedback from their team members. When employees can voice how they feel their managers are doing, they're more likely to be open to constructive feedback about their own performance. For a review to be effective, leaders and employees must be engaged and participate in the process.

Consider these six performance review examples of productive feedback a leader can receive from an employee:

  1. “I feel like my workload is too heavy, and I can't meet my goals.”
  2. “I need more training to handle my current responsibilities.”
  3. “I would like more feedback about my performance so I can improve.”
  4. “Can you help me develop my skills to reach my long-term goals?”
  5. “I feel like I'm not being recognized for the work that I do.”
  6. “My pay is not aligned with the level of work that I am doing.”

How Can Poised Help You Conduct Better Performance Reviews?

Any productive employee performance review centers on effective communication. Poised's AI-powered communication coach can help leaders and employees alike improve their communication skills and optimize performance reviews and other virtual meetings.

Improve Your Listening Skills

Poised will notify you when you need to practice more active listening. This is especially helpful during performance reviews when you need to be attentive to what your employees are saying. If you're talking too much, Poised will also let you know so that you can give your employees a chance to share their thoughts.

Make Your Video Calls More Effective

Poised can go a long way in making your team reviews and meetings more productive. With this tool, everyone in the meeting can see who is speaking. The software will also keep track of how much time each person has spoken.

Users also receive real-time feedback for improving their communication performance, and you can record your meetings to analyze them later.

Eliminate Filler Words

Too many filler words can confuse your listeners and wreck your performance reviews. Filler words are unnecessary words that often don't add anything to a sentence. They can make your writing sound choppy and can be a distraction for your listeners. Reducing your use of filler words can make your speaking clearer and more concise.

As a speech recognition software, Poised can help you improve your communication skills. It analyzes your speeches and identifies the filler words you use most often. It then provides you with exercises to help you reduce your filler word usage.

Rethink Your Body Language

If you're feeling tense or nervous, your body language will likely reflect that. You might cross your arms over your chest, hunch your shoulders, or avoid eye contact. All of these signals can make the person you're talking to feel uncomfortable and can lead to negative impressions.

Poised can help you strategize your body language during performance reviews and other video meetings. The app will provide you with feedback on how you are performing nonverbally and suggest ways to improve your communication skills. For example, if Poised notices that you are crossing your arms a lot, it might suggest that you try leaning forward or maintaining eye contact.


Performance reviews are an excellent way to ensure your employees are meeting the standards you've set for them. They also provide a forum for open communication between managers and employees and can help you identify critical employee development needs. By following the tips above, you can ensure your performance reviews are valuable tools for boosting employee productivity and engagement.


Examples of Strengths in the Workplace | Chron

What Are SMART Goals and How Can You Set and Achieve Them? | Entrepreneur

Setting Clear Expectations for Employees | Business News Daily

Are Peer Reviews the Future of Performance Evaluations? | Harvard Business Review

10 Timely Statistics About the Connection Between Employee Engagement and Wellness | Forbes

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