Not many employees relish being criticized. The best reason to conduct performance reviews is that they improve communication . Performance reviews enable employees to receive feedback on how well they have been doing their jobs, and to set goals for the next year. At many companies, they also provide a way for employees to assess their managers.
Retention is another related benefit.
Improved employee performance is another benefit of performance-review programs. Customize the review for each department and job so employees are evaluated by factors that are most relevant to their positions. The more specific the criteria used to evaluate people in specific jobs, the more effective the review will be. Consider linking performance to raises or bonuses. Although some companies have been decoupling performance reviews and compensation, linking the two can provide an incentive for employees to improve performance.