What is the impact of performance reviews on employee engagement?

Posted by Judy Fort on December 6, 2016

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Performance reviews, if done correctly, can lead towards a high-performance culture.  By giving employees a common purpose, clear expectations, capability, and commitment and building this culture across the organization, employees have a clear insight into where the company is headed, their role in making this happen, what it will take to happen, and what’s in it for them if it does.

An employee’s direct manager has the most insight into and employee’s day to day performance and are most involved in performance reviews, making them a key player when it comes to driving employee engagement.  Some ways they can use the performance review to help foster a more engaged workforce include a focus on performance views and showing employees show they contribute to the overall success of the company.

LinkedIn shares that managers who received feedback on their strengths showed 8.9% greater profitability.  Regular feedback to these managers, specifically focusing on their strengths, contribute to this increase – and to a lower turnover rate (14.9% lower).  From this study and many others like it, a great point is raised that your performance review should not only point out and lead to discussions about where an employee is struggling, but should also highlight and work on developing an employee’s strengths.

Just be careful - if your performance review process is viewed as your employees as unfair or lacking value, the results can be negative.  Holding off on providing employees with feedback until the review cycle and not giving them meaningful feedback in a timely manner is one example, while another is giving seemingly arbitrary ratings that aren’t in line with the feedback you’ve been giving your employees throughout the year.  Make sure that your managers are trained in how to get the most of the performance review instead of forcing them to comply to a bell curve.  We’ve compiled a list of reasons why employees might not see value in the performance review and what you can do to combat these ideas and increase engagement.  We also can offer alternatives to some practices that contribute to these negative perceptions.

While performance reviews are often looking at measuring how an employee has done in the past, remember that they can also be a good tool to motivate employees towards continuing to do well or to improve in the future.  Take the opportunity to provide meaningful (and timely) feedback to your employees and combine these with training opportunities when needed to help make sure your employees are seeing the value and to keep them engaged.