Impact of Performance Review on Organization’s Performance

Impact of Performance Review on Organization’s Performance

Performance review plays a vital role in influencing an organization’s performance. Performance review refers to the process of evaluating and documenting an employee’s job performance after a given period. Apart from assessing whether an employee is productive and able to meet the designated tasks within the time provided, the human resource department is also tasked with evaluating the employee’s specific behaviors and whether these behaviors align with the organization’s policies. It is only through a thorough performance evaluation process that the organization can achieve these two objectives. However, the implementation of the performance review may have either positive or negative implications by affecting employees’ motivation, retention, level of teamwork, or the organization’s culture.

An employee performance review acts as motivation for the employees to increase their productivity. By reviewing employees’ performances, the HR department can identify the goals that the employees should accomplish, how to accomplish them, and defining the rewards that the employees will enjoy if they perform well. From such a well-structured performance review plan, employees can be motivated to improve their productivity thus increasing the company’s performance. With the presence of an effective performance review, employees can be recognized for their exemplary performance while those who are underperforming are given more training and are advised on areas to adjust, thus reducing employee turnover as most employees will find it better and conducive to work in the organization. Also, the performance review gives the management the opportunity to discuss with the employees on how to improve their productivity even better thus making the employees feel like part and parcel of the entire organization thus creating the spirit of teamwork in the company.

In today’s business environment, the most preferred performance review system is the 360-degree performance review where the employees are given the mandate to evaluate themselves unlike in the past when their managers assessed them. Under this method, an employee’s coworkers, junior staffs, and other senior managers give their opinion on the employee’s performance and behavior. Through this, the HR department can come up with a final review that incorporates the views of all those stakeholders who are affected by the employee’s performance before making the final decision. One of the multinational companies that have successfully applied the 360-degree performance review method is the Starwood Hotels & Resorts Worldwide, Inc. The technique is effective, sustainable, and aligns with the employee performance in the company by giving customers, co-workers, junior and senior managers to provide their reviews on the employees’ performance and behavior. It also enhances credibility in the assessment process and self-development among employees thus increasing their trust in the management.


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