Happy employees are an integral part of a thriving, growing company. A recent study found that only 40 percent of employees know their company’s goals and strategies. This lack of direction can have huge impacts on employee productivity and a company’s overall financial success. Effective performance reviews can reverse this statistic and get your business back on track. Here are a few reasons why performance reviews are so valuable.

Impacts Employee Satisfaction

Performance reviews are an opportunity for employees to get one-on-one time with their managers, share concerns, and set future goals. This investment tells the employee that you care about their needs and concerns and want them to have a positive working experience. In addition, you can discuss training and personal development needs with your staff during the review process. This move will make your employees feel appreciated and will help improve overall morale.

Aligns Tasks with Company Goals

If done properly, performance reviews can have a huge impact on the company’s overall objectives and goals. An official review is a time to measure an employee’s work progress and habits and evaluate whether their time is well-spent. Taking a hard look at these pieces will help clarify expectations, improve communication, and increase overall productivity. The review is also a time to set and measure goals. If an employee is struggling with a particular task, managers have the chance to assist before too much time and money is lost.

Creates Accountability & Legal Trail

Regular performance reviews also have formal legal implications. Managers should be clearly documenting any conversations about performance and outlining any recommended steps. Performance reviews create the paper trail necessary to take more extreme measures if an employee is not meeting expectations. This official process creates a little more accountability for the employee as well.

Creates Merit System

Official reviews allow a company to reward and advance according to performance. Naturally, you want your best employees moving up into more strategic roles. You also want to compensate your best performers and recognize them for a job well-done. The review process allows you to link compensation to performance in a fair, consistent, and visible way.

As you can see, performance reviews have tremendous value for the company and the workforce. Frequent and consistent reviews can help define roles, clarify goals, create accountability, and provide a fair and visible form of reward and recognition. Both you and your staff will welcome the opportunity to learn and grow through this valuable process.

Stephen Koppekin is the founder of Koppekin Consulting, Inc. Contact Stephen to learn more about how you can better manage, retain, and value your employees.