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Why are performance reviews useful?


Conducting employee performance reviews is a mammoth task. Performance reviews cannot be conducted in a single day or a week. It requires a lot of time and patience from the senior officials. However, it is important to keep in mind that organizations must be willing to put in their effort in conducting performance reviews. Some organizations would conduct performance reviews once in a year and get it over with. But are annual reviews good enough?  

Performance management is a nurturing process. It needs to be holistic and open to change. Say for instance, when we review employee goals, a periodic performance review would help us understand what works well and what does not. Ultimately, we need to aim towards employee development and engagement. However, when it comes to annual reviews goals are reviewed only once a year and there is minimal room for feedback. 

In this article, let us explore why performance reviews are useful and five ways they benefit us: 

Scope for improvement 

Conducting performance reviews periodically helps in focusing on areas where the employee needs to improve himself. Managers will be able to understand the employees’ strengths and weaknesses. Performance reviews require continuous feedback that helps employees to understand their scope for improvement and managers can suggest different training programs to hone employee skills. Employee skill training programs must be an integral part in performance reviews.  

When we try and examine the main objective of performance reviews, we need to ask ourselves if it is only confined to ratings or a boring HR process that must be carried out at the end of the year. It is good to look at the process of performance reviews as something that is holistic and gives more room for having a progress dialogue. There is more to performance reviews than just ticking boxes against employee competencies. 

Documents employee performance 

One great benefit of conducting performance reviews is that all the information regarding an employee, personal or professional is maintained in one place. Managers and HR can review these documents at any point of time and analyze the performance trends of the employees based on their past performance reviews. With such insightful analytics, it becomes easier for the manager to formulate developmental strategies for the employees.  

Alignment of goals 

One primary objective of performance management is to ensure if goals are met in an efficient manner. Employee goals must be tied to the overall goals of the organization as such. Since performance management is a holistic process, it needs to ensure if employee goals are aligned with the objectives of the organization. This can only be ensured if performance reviews are conducted in a periodic manner because only then we will be able to review the goals from time to time. Lack of clarity on the objectives can demotivate employees because they do not know why they are doing what they are doing. When employees are clear about the objectives of the company, they will be able to understand how their goals are contributing to the company 

Increases employee engagement 

Since we spoke about aligning employee goals with business objectives, performance reviews must be aligned the same way. This way employees will understand how their contribution is valued in the organization. They would always want their work to impact the organization in a positive way. Continuous performance management helps employees to be motivated towards their work. It increases team collaboration and fosters their dedication to the organization. Periodic performance reviews will help employees get some clarity on their strengths and weaknesses. This stimulates motivation and increases employee engagement


Conducting performance reviews is no joke. It requires a lot of time and effort. However, periodic performance reviews could do wonders for your organization in terms of increasing employee engagement and business profitability. However, it is always best for companies to leverage a performance management software, because it practically acts like a digital platform for continuous communication among managers and employees. Since half the workforce is comprised of digital natives, then it is always a good idea to invest in technology that could minimize your burden when it comes to conducting performance reviews or fostering employee engagement.