The Pros and Cons of Performance Reviews

February 6th, 2017 Comments off
performance reviews

Does your small business conduct annual performance reviews because of their helpfulness or because doing so is a standard business practice? If the latter, it may be time to join the ranks of Accenture, Microsoft, and other companies both large and small that are rethinking or even eliminating performance reviews. Consider the following issues when determining what role (if any) they should play at your small business.


Employees thrive on feedback. It instills a sense of confidence that they are doing their jobs correctly and makes them aware of what they need to change in order to perform better. Annual reviews ensure that busy small business leaders sit down at least once a year to offer constructive criticism to all workers in a comprehensive, structured manner.

But managers who already provide feedback on a regular basis may deem performance reviews unnecessary. Small businesses need to address problems as they arise, not allow them to continue until an appointed time. Failure to offer immediate feedback lulls workers into complacency – if the boss hasn’t said anything, I must be performing fine, right? When everything comes out at the review, an employee can feel sideswiped and resentful.


Performance evaluations offer a great chance to gush over exceptional employees. Hearing positive comments boosts morale, and a written document rating abilities and detailing accomplishments serves as both a source of pride and a welcome addition to one’s career file.

As with constructive feedback, however, many small business leaders prefer concentrating on timely praise. Employees know exactly which actions are being applauded, and they realize management consistently notices their efforts.

Forum for future

Small business owners can become so wrapped up in what needs to be done today that they fail to discuss critical long-term issues. Having a central season for one-on-one discussions of salary increases, career development and personal goals keeps employees from getting frustrated about when these things will be addressed.

Grouping these areas with a performance review, however, has possible pitfalls. Workers may be so focused on compensation that they aren’t particularly attentive to other things said. Likewise, some employees may fail to bring up important issues or make truthful self-assessments out of fear that their raise or promotion might be jeopardized.


Finally, the hectic pace of a small business may leave little time for an owner to reflect on his or her team. Performance reviews provide the chance to gain a thorough impression of each member and their role in the company’s success. Trends may emerge that highlight valuable food for thought going forward.

Remember, though, that the subjective nature of “scoring” poses potential problems. Unless they’ve been jotting notes throughout the year, evaluators tend to put a disproportionate weight on recent events. Employees anxious to get top marks may keep problems to themselves or become competitive with co-workers, which does little to promote the “we’re all in this together” mindset small businesses desire.

Learn how to give better performance feedback. Check out The Art of Giving Employee Feedback.