Most might use the reviews to develop a

Most employees are subject to performance reviews. In this lesson, you will learn about performance reviews and some of their key concepts and be provided some examples.

What Is a Performance Review?

A performance review, also known as a performance appraisal, is a tool to measure and assess employee efficiency and effectiveness. Managers can use a performance as a rational and objective basis to determine whether further training is required, a wage or salary increase is warranted, or an employee should be promoted to a higher-level position.

Key Concepts

A performance review ideally involves three steps. First, the manager and employee should sit down and clearly define job duties and expectations of job performance so that they’re both on the same page. Second, the manager should conduct the performance by comparing the employee’s performance against the standards and expectations developed in the first step. And, finally, the manager should provide the employee with feedback about his or her performance in light of the established standards and expectations.

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Based on the appraisal results, the manager might recommend the employee get further training or that the standards and expectations be modified. He or she also might recommend a pay raise or promotion for the employee.


As an example, let’s say you’re a manager at a production facility where you manage the first shift of production workers on an assembly line. You meet with your employees and explain the company’s expectations regarding productivity and efficiency standards such as units completed per hour and error rates.

You invite employee input and confirm that all employees understand the performance standards they need to meet.The time for the company’s semi-annual reviews comes around, and you pull an employee’s file to compare his levels of production and error rates for the past six months against the company standards. You then bring the employee in and explain the differences between the standards and the employee’s work, which includes both strengths and weaknesses.

You and the employee agree on a plan of action including some training to help improve the employee’s error rate. You also inform the employee that he’s entitled to an increase in his hourly wage based upon his performance.

Lesson Summary

A performance review is a process by which management can assess employee efficiency and quality and make adjustments as needed. The process involves three general steps. First the manager ensures that employees understand their duties and management’s expectations pursuant to standards that will be used for reviews.

Next, specific employee behavior is compared against the standards. And, finally, the employee is given feedback regarding his or her work compared to the standards and expectations. Managers might use the reviews to develop a plan for improvement and as an objective basis to determine whether a promotion or pay raise is warranted.

Learning Outcomes

After completing this lesson, you should be able to accomplish the following:

  • Describe what performance reviews are and how they aid both employees and employers
  • Explain the three steps of a performance review

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