What is a Performance Review?

A performance review, also known as a performance appraisal or evaluation, is a formal process where managers assess an employee’s job performance over a specific period. In Human Resources, it serves as a key tool to measure productivity, provide feedback, set goals, and support employee development. Performance reviews help align individual contributions with organisational objectives while fostering growth and accountability.

Why Performance Reviews Matter in HR

Performance reviews play a vital role in managing and improving employee performance. When done effectively, they help:

• Clarify job expectations and performance standards
• Recognise achievements and identify areas for improvement
• Encourage open communication between employees and managers
• Support career growth through feedback and goal-setting
• Align employee objectives with business goals

Without regular performance reviews, employees may lack clarity on how their work contributes to the organisation’s success, leading to disengagement or stagnation.

McKinsey found that companies that focus on their people’s performance are 4.2 times more likely to outperform their peers, realise an average 30% revenue growth, and experience attrition 5% lower. Companies which prioritise performance doesn’t just drive outcomes it helps drive people forward.

How HR Conducts Performance Reviews

HR departments typically design and oversee the performance review process to ensure fairness, consistency, and alignment with company values. Common steps include:

1. Setting clear performance objectives and KPIs at the start of the review period
2. Collecting feedback from managers, peers, and sometimes customers (360-degree feedback)
3. Reviewing performance data such as targets achieved, project outcomes, and behavioural competencies
4. Holding one-to-one review meetings to discuss progress, challenges, and future goals
5. Documenting outcomes and development plans for follow-up and accountability

These reviews often occur annually or biannually, but many organisations are moving toward more frequent, agile performance check-ins to maintain continuous feedback and engagement.

Best Practices for HR Teams

To ensure performance reviews are effective and meaningful, HR teams should:

• Train managers to deliver constructive, balanced feedback
• Encourage two-way dialogue and employee self-assessment
• Link performance discussions to career development and training opportunities
• Use clear, objective criteria to avoid bias
• Follow up on goals and development plans throughout the year

A supportive and transparent performance review process helps employees feel valued, motivated, and aligned with the organisation’s vision.

How XCD Supports Performance Reviews

XCD’s Performance Management module simplifies and streamlines the entire review process.  With xcd HR teams can easily manage appraisals while keeping employees engaged in their growth journey.