What is a performance review?

A performance review, also known as a performance appraisal or evaluation, is a structured process in which an employer assesses an employee’s job performance over a specific period. These reviews aim to provide constructive feedback, recognize accomplishments, and set future goals.

They are often held annually or semi-annually but can also occur on a more frequent basis, depending on the organization’s needs. Performance reviews offer a formal opportunity for dialogue between employees and their managers, helping align individual contributions with the company’s overall objectives.

What are common goals for performance reviews?

Performance reviews serve multiple purposes, including:

• Enhancing communication: Encouraging open, two-way communication between employees and managers.

• Providing feedback: Offering constructive feedback to highlight strengths and address areas for improvement.

• Setting goals: Establishing clear, measurable objectives for the future.

• Identifying development needs: Highlighting opportunities for training, upskilling, or career progression.

• Recognizing achievements: Celebrating accomplishments to boost morale and motivation.

• Supporting decision-making: Informing decisions on promotions, salary adjustments, and resource allocation.

Performance review examples and are they still used in workplaces?

While traditional annual performance reviews remain common, many organizations are evolving their approach. Examples of performance review structures include:

• 360-degree feedback: Gathering input from multiple sources, including peers, subordinates, and customers.

• Check-In conversations: Frequent, informal discussions focused on ongoing performance and development throughout the year in a structured, scheduled way.

• Project-based reviews: Evaluations conducted at the end of specific projects or milestones.

Though traditional reviews are still widely used, they have faced criticism for being too rigid, backward-looking, or infrequent. Many workplaces now complement or replace them with continuous performance management systems to foster real-time feedback and agility.

By far the worst outcome of a traditional annual review is employee surprise. When day-to-day management is flowing smoothly, the annual review should be more of a recap of last year and planning for next year, not a big surprise to the employees of all the things they did poorly over the last year.

Legal and other common pitfalls of performance reviews

Performance reviews, if poorly managed, can lead to various legal and operational issues. Key pitfalls include:

1. Lack of specificity: Feedback that is vague or generalized is unhelpful to employees and may hinder improvement. For example, saying “You need to be more proactive” without specific examples leaves employees uncertain about what changes are expected.

2. Implicit bias: Decisions based on general impressions or stereotypes can expose organizations to discrimination claims. Feedback should be objective and evidence-based, focusing on measurable performance criteria.

3. Inconsistent standards: Applying different evaluation criteria across employees can lead to allegations of unfair treatment or favouritism.

4. Failure to document: Insufficient documentation of performance discussions can weaken an organization’s position in disputes, such as wrongful termination claims.

To mitigate these risks, employers should:

• Train managers: Equip managers with the skills to conduct fair and effective performance reviews, including recognizing and mitigating implicit biases.

• Ensure policy compliance: Align performance reviews with organizational policies on equality, diversity, and inclusion.

• Use objective metrics: Base evaluations on clear, job-related criteria to ensure consistency and fairness.

• Document thoroughly: Maintain detailed records of all performance discussions to support accountability and transparency.

Performance reviews remain a vital tool for employee development and organizational success, but their effectiveness hinges on thoughtful implementation and on effective day-to-day management between reviews. By avoiding common pitfalls and prioritizing fairness and specificity, employers can foster a productive and legally compliant review process.

By Lisa Stam, SpringLaw