The Benefits of Performance Reviews

The end of the financial year provides Not for Profit organisations with an opportunity to do a “stocktake” on their financial performance, but a review of the team’s performance is equally important, writes Westpac Social Sector Banking’s National Marketing Manager Lali Wiratunga.

 While the end of the financial year provides organisations with an opportunity to do a “stocktake” on their financial performance, equally important, but often overlooked, are regular reviews of the team’s performance.

It is often said employees are the most important asset.  If this is accepted, it would also stand to reason that people leaders would also review the performance of their employees.

The current financial year is due to end soon, and for many organisations this means review of performance targets for the financial year ahead.  However, this is also an excellent time to review performance from the previous year.

Performance reviews, performance appraisals or whatever you want to call them, are a key aspect of keeping your team engaged and ‘buying in’ to what the business is trying to achieve.  However, for some – both people leaders and employees – performance appraisals can be seen as a tiresome and difficult process, but it need not be.

When both parties know what is expected of them, a performance review should not contain any nasty surprises. However, lack of clear expectations is often where problems begin.

Most employees have a strong work ethic and want to do well. In the For Purpose sector, the intrinsic motivation that derives from a connection to the organisation’s purpose is likely to be high. Notwithstanding, feedback from peers and people leaders is an important gauge for what an employee is doing well and what areas need development.

It is important to remember that feedback should not happen only at the end of the year in the form of an official performance appraisal. Feedback should happen regularly to ensure all parties are on the same page and any issues can be addressed quickly.

A quick search of the internet shows many different models of performance management; too many in fact to mention here. However, this four step process has traditionally worked well for setting employees up to achieve the best possible results.

Step 1.  Ensure expectations are clear, for no other reason than employees are typically more productive when they know what is expected of them and when.  These expectations may be set on a weekly basis but also typically cover a longer term, say half yearly or yearly.  Some employers fall into the trap of assuming that their staff know what is expected of them.  As a people leader, it is your responsibility to be clear.

Step 2.  Assess performance regularly.  Some people leaders complete an annual performance review and think their job as a people leader is done.  Of course, an annual performance review is important to discuss what has been achieved over the year, but performance should be assessed on a regular basis to make sure projects are on track, milestones are being met and any queries resolved.  A monthly catch up is a good starting point, to review not only output, ie what is being achieved, but also behaviours, ie, how it is being achieved.

Step 3.  Provide feedback on a regular basis. Ideally, you should not need a formal catch up to provide feedback, but it is imperative that feedback is provided when performance is assessed.  Feedback should include recognition of the effort, improvements and achievements throughout the past month, quarter or year, which is an excellent motivator for many employees.  This is also the time to provide constructive feedback for development areas.  Providing constructive feedback to highlight and bridge performance gaps, if delivered in the right way, can be equally motivating as most employees want to continually improve their knowledge and skills.

Step 4.  Continuous development will keep employees engaged and will ultimately result in increased productivity.  Development planning looks not only at what the employee needs to do to complete their current role, but also helps to up-skill them for their next role.  Development means different things to different people, but typically encompasses learning new skills on the job, secondments, mentoring, new responsibilities or stretch targets and formal courses.

A well thought out performance management system will reap benefits for both employers and employees.

Do you have a formalised system to review and develop staff?

If not, spending some time to investigate and put a performance management process into place can help provide your business with the many benefits that stem from increased productivity.

About Westpac Social Sector Banking: Westpac Social Sector Banking is deeply committed to the For Purpose sector, and can proudly say we have a national team of dedicated specialists and customised banking solutions to service the sector. The sole aim of our bankers located across Australia is to deliver better banking experiences for Social Sector customers. For more information, visit Westpac Social Sector Banking.

About The Davidson Institute: It is Australia’s First School of Money, backed by Westpac Banking Corporation. It provides an extensive range of financial education, from free seminars to facilitated sessions on Cash Flow to Superannuation, and accredited courses in finance. For more information visit www.davidsoninstitute.edu.au for a number of useful articles. Short courses are also available.