Performance management

What is a performance review?

Performance reviews can be subjective and the tools you will learn in this unit will help you break down aspects of a staff member’s achievements and areas for improvement. The goal of performance management is always to create a productive working environment and positive team culture. It is important to note that a performance review should not incorporate a salary review although the performance review will go towards assessment of any salary review.

Other objectives are:

• To align staff with corporate goals
• To improve an individual’s understanding of their responsibilities and expected workplace standards.
• To identify training or development requirements and plans to address these
• To identify improvements to company policies and procedures 
• To give feedback and and identify and address areas of unsatisfactory performance
• To reward performance exceeding expectations
• To set an employee’s goals for the next performance review period and beyond. Often referred to as Key Performance Indicators (KPIs).

An employee’s performance review and related processes is an essential part of the management process which will help to drive performance, productivity and a positive company culture.  They will help to manage organisational risk and set the  accountability for agreed outcomes.

It is recommended a performance review not be used to encompass formal disciplinary issues as these need to be addressed as a separate specific meeting to tackle the relevant disciplinary breach.  Whilst the outcome of previous performance reviews may be used as a subject in a Disciplinary Review, the converse should not occur.  Refer to separate Disciplinary Review Training.

As such it is important that the performance review process is managed in a fair and transparent manner. All aspects of the performance review process should be treated confidentially and formally documented.  Certain aspects of a performance review may need to be shared with others and as such these should be identified and discussed with the employee during the process.

Setting performance expectations & the performance appraisal agreement

Best practice recommends that employers develop performance agreements to set the performance expectations for an employee as part of their induction or when entering into a new role. 

This process should outline the employees job responsibilities, workplace goals and how the employee will be assessed in their performance review(s).  In some organisations, these expectations will be prepared collaboratively between relevant parties whilst in other cases, expectations may be pre-defined by management. 

In either case, when setting performance expectations the following should be incorporated into a performance appraisal agreement which includes:

A statement of job responsibilities as normally found on an employee’s Job Description.

A calendar of performance review dates recommended for at least the next 12 months

Set expected level of achievement for each objective, commonly referred to as KPI’s

Run through essential company policies including but not limited to Company Culture, Strategic Plans, Code of Conduct, and Cyber Security.

An employee’s performance will be measured against their performance appraisal agreement, so it’s important to cover all aspects of the employers expectations and answer any questions the employee may have.

The performance appraisal agreement will be updated periodically to reflect the agreed outcomes from performance review meetings.

A Standard of Performance is a statement of the conditions which will exist when a job, responsibility or goal is being or has been satisfactorily performed:

• Conditions should be quantified in terms of quality, quantity, time or timeliness and cost or revenue.

• If there is no way to determine whether an activity is being or has been satisfactorily performed, then why include it in the review or ask why should it be done at all?l

• Performance standards should be realistic, believable and achievable

• Performance standards should only apply to major job responsibilities when initially setting performance expectations and establishing the performance appraisal agreement. Thereafter additional goals can be added at future performance reviews.

The Performance Review Cycle

Best practice is that each staff member should undergo at least one formal annual performance review  and one mid term review per year.  Roles such as sales or project management may require more frequent and regular reviews.  

Whilst the performance review does not incorporate a salary review, in many roles, it is used towards future assessment of salary or other bonuses, so it’s important that the process is managed in a fair and transparent manner. 

Performance reviews should be run as an interview, as such always in a private and confidential  setting.  The process should be open, honest and with the full participation of the person being appraised.  Alw

Reviews should be measured against the performance appraisal agreement which will then be updated with agreed outcomes from the meeting.

In some workplaces, it may be recommended to consider conducting performance reviews outside peak periods. For example, in a retail operation, it would be wise to avoid periods like christmas so as not to be a distraction from these core business periods. 

Reviews are an opportunity to address performance against Key performance indicators, ensure the performance appraisal agreement still matches their job priorities and objectives, and the organisation’s strategic direction. This is an important opportunity to notify the staff member of areas of improvement required and to identify any training or development needs they may have.

During the performance review cycle, management should keep a record of critical events and milestones.