Are Performance Reviews Really That Important?

The answer is simple, YES! People value feedback more than you realize.


Only 15% of companies do performance reviews.  There is a major correlation with companies that do and employee retention. You should be doing performance reviews at least once a year, if not more.

Performance reviews help us with the following:

  1. Inform employees

  2. Increase productivity

  3. Retain staff

  4. Retain millennials, in particular

  5. Allows you to fire with less risk

A performance review should be 40% encouragement, 20% development needs, 20% improvement points, 10% self-reflection and 10% ideas on company change. Salary change would also be discussed during this time. Examples are key during performance reviews, and you should always tell the truth.

Informing your employees of how you view their performance and what you’d like to see change is important to keeping morale and positivity up. Millennials in particular really need this feedback from their leadership. You can’t expect your employees to improve if you don’t inform them and let them know what you are looking for. This also allows you to fire someone with less risk.

Performance reviews are also a great time to receive feedback from your employees. Providing feedback is essential, but receiving feedback is equally important. Allow your employees the time to review their supervisor and the company as a whole. A CEO will never know unless he/she asks if the employees are truly satisfied and aren’t looking to leave. Ask what they might do differently if they were the supervisor. See what they need from leadership and if there has been a recent positive or negative experience that they would like to share.

Keep a hard copy of every performance review and have everyone present sign the document. You may want to consider multiple HR personnel in the room during the review.

If you have further questions about performance reviews, contact us!