The Real Value of Performance Reviews

Our CEO Peer to Peer Advisory Group here in DFW had our monthly meeting today and our Educational Component was on Employee Performance Reviews. We took time to share the format and documents used at each of our companies and then learned best practices from each other. Our members spend a lot of time pouring into their teams to build a culture of engaged and dedicated employees. These performance reviews are a great tool to help our teams know they are being heard and give us a platform to nurture and challenge our teams to be their best.

During our meeting, we asked lots of questions about each other’s processes and found something we could learn from each one. Seeing other peoples methods opened our eyes to new ideas and concepts we had not considered before.

If you hate doing employee performance reviews let me share some great ideas that I think will help you see them in a new light.

1.) No Surprises.

Take time to talk with your team all year long and give them clear feedback so they can make improvements along the way. If the info in your performance review is a surprise to them you are not leading well.

2.) Separate Performance Reviews from Salary Increases.

When money is tied to these reviews things get off track. Supervisors feel frustrated that they can’t give an increase for excellent performance when money is tight and employees feel its unfair to have performed so well and not be rewarded. Most agreed that merit pay increases should be annually based on the profitability of the company, and that bonuses were better than salary increases.

3.) Visit Regularly.

Annual reviews are great to align their goals for the year with the company’s goals, talk about professional development, and update career goals. Quarterly reviews help each employee assess progress against goals and allow leaders to give timely redirection and encouragement. I have used a Top 5 sheet for years to help my team know what activities matter most each week against quarterly goals. Then you can have a short meeting each Monday to review last weeks performance and set activities for this week. It allows employees to stay self-directed and add the most value to the progress of over all goals.

4.) Do Peer Reviews.

A Peer Review allows the employee and you to see how well they work with others. They may be hitting their goals but leaving a trail of bodies along the way. When you do a Peer Review it should include assessments from the employee, their direct supervisor, and at least two peers; one from their department and one or more from another department they interact with. All the assessments need to be numerical answers and then you can combine them all to find an average. Do not let the employee see the answers from other peoples comments but you can use their feedback to plan future personal and professional development programs for the employee.

5.) Create a Benefit Statement sheet.

This was one of the best things shared today and this applies to merit pay increase situations. When you meet with the employee to talk about a possible raise start by showing them who much the company pays in total for them to work there. Things employees don’t consider like employment taxes, healthcare fees, PTO, Holidays, Bonuses, 401k and more. If the employee has a $90,000 a year salary the company could be paying $150,000 or more a year in total expenses. Let them see the numbers so they see just how much you are already investing in them, then reward great performance as it is deserved. Some reviews included showing the amount of profit the company made so employees understand although we had annual sales of $15 Million our net profit may have only been $900,000.

The last thing I would add is that you need to have a good attitude about this. If you complain, drag your feet, or hurry to get it over with, your employee will have the same attitude. These reviews are a powerful tool to help our employees know they matter to us and to the success of the company. They are a great part of keeping great employees and increasing employee engagement. They also help you learn what your team needs from you to get better results and build leaders worth following.

If you need help with this let’s talk today, email me at

Robert Hunt

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